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5 ,000 YEARS 







5,000 YEARS 




© 2011 David Graeber 

First Melville House Printing: May 2011 

Melville House Publishing 
145 Plymouth Street 
Brooklyn, New York 11201 

ISBN: 978-1-933633-86-2 

Printed in the United States of America 

123456789 10 

Library of Congress Cataloging-in-Publication Data 
Graeber, David. 

Debt : the first 5,000 years / David Graeber. 
p. cm. 

Includes bibliographical references and index. 
ISBN 978-1-933633-86-2 (alk. paper) 

1. Debt-History. 2. Money-History. 3. Financial crises-History. 
I. Title. 

HG3701.G73 2010 
332— dc22 



1 On The Experience of 

Moral Confusion 1 

2 The Myth of Barter 21 

3 Primordial Debts 43 

4 Cruelty and Redemption 73 

5 A Brief Treatise on the Moral 

Grounds of Economic Relations 89 

6 Games with Sex and Death 127 

7 Honor and Degradation, or, 
On the Foundations of 

Contemporary Civilization 165 

8 Credit Versus Bullion, 

And the Cycles of History 211 

9 The Axial Age (800 BC-600 AD) 223 

10 The Middle Ages (600 AD-1450 AD) 251 

n Age of the Great Capitalist 

Empires (1450-1971) 307 

12 (1971-The Beginning of Something 

Yet to Be Determined) 361 

Notes 393 

Bibliography 455 

Index 493 

Chapter One 


• noun i a sum of money owed. 2 the 
■state of owing money. 3 a feeling of 
gratitude for a favour or service. 

— Oxford English Dictionary 

If you owe the bank a hundred thou- 
sand dollars, the bank owns you. If 
you owe the bank a hundred million 
dollars, you own the bank. 

— American Proverb 

TWO YEARS AGO, by a series of strange coincidences, I found myself 
attending a garden party at Westminster Abbey. I was a bit uncom- 
fortable. It's not that other guests weren't pleasant and amicable, and 
Father Graeme, who had organized the party, was nothing if not a gra- 
cious and charming host. But I felt more than a little out of place. At 
one point, Father Graeme intervened, saying that there was someone 
by a nearby fountain whom I would certainly want to meet. She turned 
out to be a trim, well-appointed young woman who, he explained, was 
an attorney — "but more of the activist kind. She works for a founda- 
tion that provides legal support for anti-poverty groups in London. 
You'll probably have a lot to talk about." 

We chatted. She told me about her job. I told her I had been 
involved for many years with the global justice movement — "anti- 
globalization movement," as it was usually called in the media. She 
was curious: she'd of course read a lot about Seattle, Genoa, the tear 
gas and street battles, but . . . well, had we really accomplished any- 
thing by all of that? 

"Actually," I said, "I think it's kind of amazing how much we did 
manage to accomplish in those first couple of years." 



"For example?" 

"Well, for example, we managed to almost completely destroy 
the IMF." 

As it happened, she didn't actually know what the IMF was, so 
I offered that the International Monetary Fund basically acted as the 
world's debt enforcers — "You might say, the high-finance equivalent 
of the guys who come to break your legs." I launched into historical 
background, explaining how, during the '70s oil crisis, OPEC coun- 
tries ended up pouring so much of their newfound riches into Western 
banks that the banks couldn't figure out where to invest the money; 
how Citibank and Chase therefore began sending agents around the 
world trying to convince Third World dictators and politicians to take 
out loans (at the time, this was called "go-go banking"); how they 
started out at extremely low rates of interest that almost immediately 
skyrocketed to 20 percent or so due to tight U.S. money policies in the 
early '80s; how, during the '80s and '90s, this led to the Third World 
debt crisis; how the IMF then stepped in to insist that, in order to 
obtain refinancing, poor countries would be obliged to abandon price 
supports on basic foodstuffs, or even policies of keeping strategic food 
reserves, and abandon free health care and free education; how all of 
this had led to the collapse of all the most basic supports for some of 
the poorest and most vulnerable people on earth. I spoke of poverty, 
of the looting of public resources, the collapse of societies, endemic 
violence, malnutrition, hopelessness, and broken lives. 

"But what was your position?" the lawyer asked. 

"About the IMF? We wanted to abolish it." 

"No, I mean, about the Third World debt." 

"Oh, we wanted to abolish that too. The immediate demand was 
to stop the IMF from imposing structural adjustment policies, which 
were doing all the direct damage, but we managed to accomplish that 
surprisingly quickly. The more long-term aim was debt amnesty. Some- 
thing along the lines of the biblical Jubilee. As far as we were con- 
cerned," I told her, "thirty years of money flowing from the poorest 
countries to the richest was quite enough." 

"But," she objected, as if this were self-evident, "they'd borrowed 
the money! Surely one has to pay one's debts." 

It was at this point that I realized this was going to be a very dif- 
ferent sort of conversation than I had originally anticipated. 

Where to start? I could have begun by explaining how these loans 
had originally been taken out by unelected dictators who placed most 
of it directly in their Swiss bank accounts, and ask her to contemplate 
the justice of insisting that the lenders be repaid, not by the dictator, 



or even by his cronies, but by literally taking food from the mouths of 
hungry children. Or to think about how many of these poor countries 
had actually already paid back what they'd borrowed three or four 
times now, but that through the miracle of compound interest, it still 
hadn't made a significant dent in the principal. I could also observe 
that there was a difference between refinancing loans, and demanding 
that in order to obtain refinancing, countries have to follow some or- 
thodox free-market economic policy designed in Washington or Zurich 
that their citizens had never agreed to and never would, and that it was 
a bit dishonest to insist that countries adopt democratic constitutions 
and then also insist that, whoever gets elected, they have no control 
over their country's policies anyway. Or that the economic policies 
imposed by the IMF didn't even work. But there was a more basic 
problem: the very assumption that debts have to be repaid. 

Actually, the remarkable thing about the statement "one has to 
pay one's debts" is that even according to standard economic theory, 
it isn't true. A lender is supposed to accept a certain degree of risk. If 
all loans, no matter how idiotic, were still retrievable — if there were no 
bankruptcy laws, for instance — the results would be disastrous. What 
reason would lenders have not to make a stupid loan? 

"Well, I know that sounds like common sense," I said, "but the 
funny thing is, economically, that's not how loans are actually sup- 
posed to work. Financial institutions are supposed to be ways of direct- 
ing resources toward profitable investments. If a bank were guaranteed 
to get its money back, plus interest, no matter what it did, the whole 
system wouldn't work. Say I were to walk into the nearest branch of 
the Royal Bank of Scotland and say 'You know, I just got a really great 
tip on the horses. Think you could lend me a couple million quid?' 
Obviously they'd just laugh at me. But that's just because they know if 
my horse didn't come in, there'd be no way for them to get the money 
back. But, imagine there was some law that said they were guaranteed 
to get their money back no matter what happens, even if that meant, I 
don't know, selling my daughter into slavery or harvesting my organs 
or something. Well, in that case, why not? Why bother waiting for 
someone to walk in who has a viable plan to set up a laundromat or 
some such? Basically, that's the situation the IMF created on a global 
level — which is how you could have all those banks willing to fork 
over billions of dollars to a bunch of obvious crooks in the first place." 

I didn't get quite that far, because at about that point a drunken 
financier appeared, having noticed that we were talking about money, 
and began telling funny stories about moral hazard — which somehow, 



before too long, had morphed into a long and not particularly engross- 
ing account of one of his sexual conquests. I drifted off. 

Still, for several days afterward, that phrase kept resonating in 
my head. 

"Surely one has to pay one's debts." 

The reason it's so powerful is that it's not actually an economic 
statement: it's a moral statement. After all, isn't paying one's debts 
what morality is supposed to be all about? Giving people what is due 
them. Accepting one's responsibilities. Fulfilling one's obligations to 
others, just as one would expect them to fulfill their obligations to you. 
What could be a more obvious example of shirking one's responsibili- 
ties than reneging on a promise, or refusing to pay a debt? 

It was that very apparent self-evidence, I realized, that made the 
statement so insidious. This was the kind of line that could make ter- 
rible things appear utterly bland and unremarkable. This may sound 
strong, but it's hard not to feel strongly about such matters once you've 
witnessed the effects. I had. For almost two years, I had lived in the 
highlands of Madagascar. Shortly before I arrived, there had been an 
outbreak of malaria. It was a particularly virulent outbreak because 
malaria had been wiped out in highland Madagascar many years be- 
fore, so that, after a couple of generations, most people had lost their 
immunity. The problem was, it took money to maintain the mosquito 
eradication program, since there had to be periodic tests to make sure 
mosquitoes weren't starting to breed again and spraying campaigns if it 
was discovered that they were. Not a lot of money. But owing to IMF- 
imposed austerity programs, the government had to cut the monitoring 
program. Ten thousand people died. I met young mothers grieving for 
lost children. One might think it would be hard to make a case that the 
loss of ten thousand human lives is really justified in order to ensure 
that Citibank wouldn't have to cut its losses on one irresponsible loan 
that wasn't particularly important to its balance sheet anyway. But 
here was a perfectly decent woman — one who worked for a charitable 
organization, no less — who took it as self-evident that it was. After all, 
they owed the money, and surely one has to pay one's debts. 

For the next few weeks, that phrase kept coming back at me. Why 
debt? What makes the concept so strangely powerful? Consumer debt 
is the lifeblood of our economy. All modern nation-states are built on 
deficit spending. Debt has come to be the central issue of international 



politics. But nobody seems to know exactly what it is, or how to think 
about it. 

The very fact that we don't know what debt is, the very flexibility 
of the concept, is the basis of its power. If history shows anything, it 
is that there's no better way to justify relations founded on violence, 
to make such relations seem moral, than by reframing them in the 
language of debt — above all, because it immediately makes it seem that 
it's the victim who's doing something wrong. Mafiosi understand this. 
So do the commanders of conquering armies. For thousands of years, 
violent men have been able to tell their victims that those victims owe 
them something. If nothing else, they "owe them their lives" (a telling 
phrase) because they haven't been killed. 

Nowadays, for example, military aggression is defined as a crime 
against humanity, and international courts, when they are brought 
to bear, usually demand that aggressors pay compensation. Germa- 
ny had to pay massive reparations after World War I, and Iraq is 
still paying Kuwait for Saddam Hussein's invasion in 1990. Yet the 
Third World debt, the debt of countries like Madagascar, Bolivia, and 
the Philippines, seems to work precisely the other way around. Third 
World debtor nations are almost exclusively countries that have at one 
time been attacked and conquered by European countries — often, the 
very countries to whom they now owe money. In 1895, for example, 
France invaded Madagascar, disbanded the government of then-Queen 
Ranavalona III, and declared the country a French colony. One of the 
first things General Gallieni did after "pacification," as they liked to 
call it then, was to impose heavy taxes on the Malagasy population, 
in part so they could reimburse the costs of having been invaded, but 
also, since French colonies were supposed to be fiscally self-supporting, 
to defray the costs of building the railroads, highways, bridges, planta- 
tions, and so forth that the French regime wished to build. Malagasy 
taxpayers were never asked whether they wanted these railroads, high- 
ways, bridges, and plantations, or allowed much input into where and 
how they were built. 1 To the contrary: over the next half century, the 
French army and police slaughtered quite a number of Malagasy who 
objected too strongly to the arrangement (upwards of half a million, by 
some reports, during one revolt in 1947). It's not as if Madagascar has 
ever done any comparable damage to France. Despite this, from the be- 
ginning, the Malagasy people were told they owed France money, and 
to this day, the Malagasy people are still held to owe France money, 
and the rest of the world accepts the justice of this arrangement. When 
the "international community" does perceive a moral issue, it's usually 



when they feel the Malagasy government is being slow to pay their 

But debt is not just victor's justice; it can also be a way of pun- 
ishing winners who weren't supposed to win. The most spectacular 
example of this is the history of the Republic of Haiti — the first poor 
country to be placed in permanent debt peonage. Haiti was a nation 
founded by former plantation slaves who had the temerity not only 
to rise up in rebellion, amidst grand declarations of universal rights 
and freedoms, but to defeat Napoleon's armies sent to return them to 
bondage. France immediately insisted that the new republic owed it 150 
million francs in damages for the expropriated plantations, as well as 
the expenses of outfitting the failed military expeditions, and all other 
nations, including the United States, agreed to impose an embargo on 
the country until it was paid. The sum was intentionally impossible 
(equivalent to about 18 billion dollars), and the resultant embargo en- 
sured that the name "Haiti" has been a synonym for debt, poverty, and 
human misery ever since. 2 

Sometimes, though, debt seems to mean the very opposite. Starting 
in the 1980s, the United States, which insisted on strict terms for the re- 
payment of Third World debt, itself accrued debts that easily dwarfed 
those of the entire Third World combined — mainly fueled by military 
spending. The U.S. foreign debt, though, takes the form of treasury 
bonds held by institutional investors in countries (Germany, Japan, 
South Korea, Taiwan, Thailand, the Gulf States) that are in most cases, 
effectively, U.S. military protectorates, most covered in U.S. bases full 
of arms and equipment paid for with that very deficit spending. This 
has changed a little now that China has gotten in on the game (China 
is a special case, for reasons that will be explained later), but not very 
much — even China finds that the fact it holds so many U.S. treasury 
bonds makes it to some degree beholden to U.S. interests, rather than 
the other way around. 

So what is the status of all this money continually being funneled 
into the U.S. treasury? Are these loans? Or is it tribute? In the past, 
military powers that maintained hundreds of military bases outside 
their own home territory were ordinarily referred to as "empires," and 
empires regularly demanded tribute from subject peoples. The U.S. 
government, of course, insists that it is not an empire — but one could 
easily make a case that the only reason it insists on treating these pay- 
ments as "loans" and not as "tribute" is precisely to deny the reality 
of what's going on. 

Now, it's true that, throughout history, certain sorts of debt, and 
certain sorts of debtor, have always been treated differently than 



others. In the 1720s, one of the things that most scandalized the British 
public when conditions at debtors' prisons were exposed in the popular 
press was the fact that these prisons were regularly divided into two 
sections. Aristocratic inmates, who often thought of a brief stay in Fleet 
or Marshalsea as something of a fashion statement, were wined and 
dined by liveried servants and allowed to receive regular visits from 
prostitutes. On the "common side," impoverished debtors were shack- 
led together in tiny cells, "covered with filth and vermin," as one report 
put it, "and suffered to die, without pity, of hunger and jail fever.'" 

In a way you can see current world economic arrangements as a 
much larger version of the same thing: the U.S. in this case being the 
Cadillac debtor, Madagascar the pauper starving in the next cell — 
while the Cadillac debtors' servants lecture him on how his problems 
are due to his own irresponsibility. 

And there's something more fundamental going on here, a philo- 
sophical question, even, that we might do well to contemplate. What 
is the difference between a gangster pulling out a gun and demand- 
ing you give him a thousand dollars of "p/otection money," and that 
same gangster pulling out a gun and demanding you provide him with 
a thousand-dollar "loan"? In most ways, obviously, nothing. But in 
certain ways there is a difference. As in the case of the U.S. debt to 
Korea or Japan, were the balance of power at any point to shift, were 
America to lose its military supremacy, were the gangster to lose his 
henchmen, that "loan" might start being treated very differently. It 
might become a genuine liability. But the crucial element would still 
seem to be the gun. 

There's an old vaudeville gag that makes the same point even more 
elegantly — here, as improved on by Steve Wright: 

I was walking down the street with a friend the other day and 
a guy with a gun jumps out of an alley and says "stick 'em up." 

As I pull out my wallet, I figure, "shouldn't be a total loss." 
So I pull out some money, turn to my friend and say, "Hey, 
Fred, here's that fifty bucks I owe you." 

The robber was so offended he took out a thousand dollars 
of his own money, forced Fred to lend it to me at gunpoint, 
and then took it back again. 

In the final analysis, the man with the gun doesn't have to do anything 
he doesn't want to do. But in order to be able to run even a regime 
based on violence effectively, one needs to establish some kind of set of 
rules. The rules can be completely arbitrary. In a way it doesn't even 



matter what they are. Or, at least, it doesn't matter at first. The prob- 
lem is, the moment one starts framing things in terms of debt, people 
will inevitably start asking who really owes what to whom. 

Arguments about debt have been going on for at least five thou- 
sand years. For most of human history — at least, the history of states 
and empires — most human beings have been told that they are debt- 
ors. 4 Historians, and particularly historians of ideas, have been oddly 
reluctant to consider the human consequences; especially since this 
situation — more than any other — has caused continual outrage and re- 
sentment. Tell people they are inferior, they are unlikely to be pleased, 
but this surprisingly rarely leads to armed revolt. Tell people that they 
are potential equals who have failed, and that therefore, even what 
they do have they do not deserve, that it isn't rightly theirs, and you 
are much more likely to inspire rage. Certainly this is what history 
would seem to teach us. For thousands of years, the struggle between 
rich and poor has largely taken the form of conflicts between creditors 
and debtors — of arguments about the rights and wrongs of interest 
payments, debt peonage, amnesty, repossession, restitution, the seques- 
tering of sheep, the seizing of vineyards, and the selling of debtors' chil- 
dren into slavery. By the same token, for the last five thousand years, 
with remarkable regularity, popular insurrections have begun the same 
way: with the ritual destruction of the debt records — tablets, papyri, 
ledgers, whatever form they might have taken in any particular time 
and place. (After that, rebels usually go after the records of landholding 
and tax assessments.) As the great classicist Moses Finley often liked 
to say, in the ancient world, all revolutionary movements had a single 
program: "Cancel the debts and redistribute the land." 5 

Our tendency to overlook this is all the more peculiar when you 
consider how much of our contemporary moral and religious language 
originally emerged directly from these very conflicts. Terms like "reck- 
oning" or "redemption" are only the most obvious, since they're taken 
directly from the language of ancient finance. In a larger sense, the 
same can be said of "guilt," "freedom," "forgiveness," and even "sin." 
Arguments about who really owes what to whom have played a central 
role in shaping our basic vocabulary of right and wrong. 

The fact that so much of this language did take shape in arguments 
about debt has left the concept strangely incoherent. After all, to argue 
with the king, one has to use the king's language, whether or not the 
initial premises make sense. 

If one looks at the history of debt, then, what one discovers first 
of all is profound moral confusion. Its most obvious manifestation is 
that most everywhere, one finds that the majority of human beings 



hold simultaneously that (i) paying back money one has borrowed is 
a simple matter of morality, and (2) anyone in the habit of lending 
money is evil. 

It's true that opinions on this latter point do shift back and forth. 
One extreme possibility might be the situation the French anthropolo- 
gist Jean-Claude Galey encountered in a region of the eastern Himala- 
yas, where as recently as the 1970s, the low-ranking castes — they were 
referred to as "the vanquished ones," since they were thought to be 
descended from a population once conquered by the current landlord 
caste, many centuries before — lived in a situation of permanent debt 
dependency. Landless and penniless, they were obliged to solicit loans 
from the landlords simply to find a way to eat — not for the money, 
since the sums were paltry, but because poor debtors were expected 
to pay back the interest in the form of work, which meant they were 
at least provided with food and shelter while they cleaned out their 
creditors' outhouses and reroofed their sheds. For the "vanquished" — 
as for most people in the world, actually — the most significant life 
expenses were weddings and funerals. These required a good deal of 
money, which always had to be borrowed. In such cases it was com- 
mon practice, Galey explains, for high-caste moneylenders to demand 
one of the borrower's daughters as security. Often, when a poor man 
had to borrow money for his daughter's marriage, the security would 
be the bride herself. She would be expected to report to the lender's 
household after her wedding night, spend a few months there as his 
concubine, and then, once he grew bored, be sent off to some nearby 
timber camp, where she would have to spend the next year or two as 
a prostitute working off her father's debt. Once it was paid off, she'd 
return to her husband and begin her married life. 6 

This seems shocking, outrageous even, but Galey does not report 
any widespread feeling of injustice. Everyone seemed to feel that this 
was just the way things worked. Neither was there much concern 
voiced among the local Brahmins, who were the ultimate arbiters in 
matters of morality — though this is hardly surprising, since the most 
prominent moneylenders were often Brahmins themselves. 

Even here, of course, it's hard to know what people were saying 
behind closed doors. If a group of Maoist rebels were to suddenly seize 
control of the area (some do operate in this part of rural India) and 
round up the local usurers for trial, we might hear all sorts of views 

Still, what Galey describes represents, as I say, one extreme of 
possibility: one in which the usurers themselves are the ultimate moral 
authorities. Compare this with, say, medieval France, where the moral 



status of moneylenders was seriously in question. The Catholic Church 
had always forbidden the practice of lending money at interest, but 
the rules often fell into desuetude, causing the Church hierarchy to 
authorize preaching campaigns, sending mendicant friars to travel from 
town to town warning usurers that unless they repented and made 
full restitution of all interest extracted from their victims, they would 
surely go to Hell. 

These sermons, many of which have survived, are full of horror 
stories of God's judgment on unrepentant lenders: stories of rich men 
struck down by madness or terrible diseases, haunted by deathbed 
nightmares of the snakes or demons who would soon rend or eat 
their flesh. In the twelfth century, when such campaigns reached their 
heights, more direct sanctions began to be employed. The papacy is- 
sued instructions to local parishes that all known usurers were to be 
excommunicated; they were not to be allowed to receive the sacra- 
ments, and under no conditions could their bodies be buried on hal- 
lowed ground. One French cardinal, Jacques de Vitry, writing around 
1210, recorded the story of a particularly influential moneylender whose 
friends tried to pressure their parish priest to overlook the rules and 
allow him to be buried in the local churchyard: 

Since the dead usurer's friends were very insistent, the priest 
yielded to their pressure and said, "Let us put his body on a 
donkey and see God's will, and what He will do with the body. 
Wherever the donkey takes it, be it a church, a cemetery, or 
elsewhere, there will I bury it." The body was placed upon the 
donkey which without deviating either to right or left, took it 
straight out of town to the place where thieves are hanged from 
the gibbet, and with a hearty buck, sent the cadaver flying into 
the dung beneath the gallows. 7 

Looking over world literature, it is almost impossible to find a single 
sympathetic representation of a moneylender — or anyway, a profes- 
sional moneylender, which means by definition one who charges inter- 
est. I'm not sure there is another profession (executioners?) with such 
a consistently bad image. It's especially remarkable when one considers 
that unlike executioners, usurers often rank among the richest and 
most powerful people in their communities. Yet the very name, "usu- 
rer," evokes images of loan sharks, blood money, pounds of flesh, the 
selling of souls, and behind them all, the Devil, often represented as 
himself a kind of usurer, an evil accountant with his books and ledgers, 
or alternately, as the figure looming just behind the usurer, biding his 



time until he can repossess the soul of a villain who, by his very oc- 
cupation, has clearly made a compact with Hell. 

Historically, there have been only two effective ways for a lender 
to try to wriggle out of the opprobrium: either shunt off responsibility 
onto some third party, or insist that the borrower is even worse. In me- 
dieval Europe, for instance, lords often took the first approach, employ- 
ing Jews as surrogates. Many would even speak of "our" Jews — that is, 
Jews under their personal protection — though in practice this usually 
meant that they would first deny Jews in their territories any means 
of making a living except by usury (guaranteeing that they would, be 
widely detested), then periodically turn on them, claiming they were 
detestable creatures, and take the money for themselves. The second 
approach is of course more common. But it usually leads to the conclu- 
sion that both parties to a loan are equally guilty; the whole affair is a 
shabby business; and most likely, both are damned. 

Other religious traditions have different perspectives. In medieval 
Hindu law codes, not only were interest-bearing loans permissible (the 
main stipulation was that interest should never exceed principal), but 
it was often emphasized that a debtor who did not pay would be 
reborn as a slave in the household of his creditor — or in later codes, 
reborn as his horse or ox. The same tolerant attitude toward lenders, 
and warnings of karmic revenge against borrowers, reappear in many 
strands of Buddhism. Even so, the moment that usurers were thought 
to go too far, exactly the same sort of stories as found in Europe would 
start appearing. A Medieval Japanese author recounts one — he insists 
it's a true story — about the terrifying fate of Hiromushime, the wife 
of a wealthy district governor around 776 ad. An exceptionally greedy 

she would add water to the rice wine she sold and make a 
huge profit on such diluted sake. On the day she loaned some- 
thing to someone she would use a small measuring cup, but 
on the day of collection she used a large one. When lending 
rice her scale registered small portions, but when she received 
payment it was in large amounts. The interest that she forcibly 
collected was tremendous — often as much as ten or even one 
hundred times the amount of the original loan. She was rigid 
about collecting debts, showing no mercy whatsoever. Because 
of this, many people were thrown into a state of anxiety; they 
abandoned their households to get away from her and took to 
wandering in other provinces. 8 



After she died, for seven days, monks prayed over her sealed coffin. On 
the seventh, her body mysteriously sprang to life: 

Those who came to look at her encountered an indescribable 
stench. From the waist up she had already become an ox with 
four-inch horns protruding from her forehead. Her two hands 
had become the hooves of an ox, her nails were now cracked so 
that they resembled an ox hoof's instep. From the waist down, 
however, her body was that of a human. She disliked rice and 
preferred to eat grass. Her manner of eating was rumination. 
Naked, she would lie in her own excrement. 9 

Gawkers descended. Guilty and ashamed, the family made desperate 
attempts to buy forgiveness, canceling all debts owed to them by any- 
body, donating much of their wealth to religious establishments. Fi- 
nally, mercifully, the monster died. 

The author, himself a monk, felt that the story represented a clear 
case of premature reincarnation — the woman was being punished by 
the law of karma for her violations of "what is both reasonable and 
right." His problem was that Buddhist scriptures, insofar as they ex- 
plicitly weighed in on the matter, didn't provide a precedent. Normally, 
it was debtors who were supposed to be reborn as oxen, not creditors. 
As a result, when it came time to explain the moral of the story, his 
exposition grew decidedly confusing: 

It is as one sutra says: "When we do not repay the things that 
we have borrowed, our payment becomes that of being reborn 
as a horse or ox." "The debtor is like a slave, the creditor is 
like a master." Or again: "a debtor is a pheasant and his credi- 
tor a hawk." If you are in a situation of having granted a loan, 
do not put unreasonable pressure on your debtor for repay- 
ment. If you do, you will be reborn as a horse or an ox and be 
put to work for him who was in debt to you, and then you will 
repay many times over. 10 

So which will it be? They can't both end up as animals in each other's 

All the great religious traditions seem to bang up against this quan- 
dary in one form or another. On the one hand, insofar as all human re- 
lations involve debt, they are all morally compromised. Both parties are 
probably already guilty of something just by entering into the relation- 
ship; at the very least they run a significant danger of becoming guilty 



if repayment is delayed. On the other hand, when we say someone acts 
like they "don't owe anything to anybody," we're hardly describing the 
person as a paragon of virtue. In the secular world, morality consists 
largely of fulfilling our obligations to others, and we have a stubborn 
tendency to imagine those obligations as debts. Monks, perhaps, can 
avoid the dilemma by detaching themselves from the secular world 
entirely, but the rest of us appear condemned to live in a universe that 
doesn't make a lot of sense. 

The story of Hiromushime is a perfect illustration of the impulse to 
throw the accusation back at the accuser — just as in the story about 
the dead usurer and the donkey, the emphasis on excrement, animals, 
and humiliation is clearly meant as poetic justice, the creditor forced to 
experience the same feelings of disgrace and degradation that debtors 
are always made to feel. It's all a more vivid, more visceral way of ask- 
ing that same question: "Who really owes what to whom?" 

It's also a perfect illustration of how the moment one asks the 
question "Who really owes what to whom?," one has begun to adopt 
the creditor's language. Just as if we don't pay our debts, "our payment 
becomes that of being reborn as a horse or an ox"; so if you are an 
unreasonable creditor, you too will "repay." Even karmic justice can 
thus be reduced to the language of a business deal. 

Here we come to the central question of this book: What, precisely, 
does it mean to say that our sense of morality and justice is reduced to 
the language of a business deal? What does it mean when we reduce 
moral obligations to debts? What changes when the one turns into 
the other? And how do we speak about them when our language has 
been so shaped by the market? On one level the difference between an 
obligation and a debt is simple and obvious. A debt is the obligation 
to pay a certain sum of money. As a result, a debt, unlike any other 
form of obligation, can be precisely quantified. This allows debts to 
become simple, cold, and impersonal — which, in turn, allows them to 
be transferable. If one owes a favor, or one's life, to another human 
being — it is owed to that person specifically. But if one owes forty 
thousand dollars at 12-percent interest, it doesn't really matter who the 
creditor is; neither does either of the two parties have to think much 
about what the other party needs, wants, is capable of doing — as they 
certainly would if what was owed was a favor, or respect, or gratitude. 
One does not need to calculate the human effects; one need only cal- 
culate principal, balances, penalties, and rates of interest. If you end 



up having to abandon your home and wander in other provinces, if 
your daughter ends up in a mining camp working as a prostitute, well, 
that's unfortunate, but incidental to the creditor. Money is money, and 
a deal's a deal. 

From this perspective, the crucial factor, and a topic that will be 
explored at length in these pages, is money's capacity to turn moral- 
ity into a matter of impersonal arithmetic — and by doing so, to justify 
things that would otherwise seem outrageous or obscene. The factor 
of violence, which I have been emphasizing up until now, may appear 
secondary. The difference between a "debt" and a mere moral obliga- 
tion is not the presence or absence of men with weapons who can en- 
force that obligation by seizing the debtor's possessions or threatening 
to break his legs. It is simply that a creditor has the means to specify, 
numerically, exactly how much the debtor owes. 

However, when one looks a little closer, one discovers that these 
two elements — the violence and the quantification — are intimately 
linked. In fact it's almost impossible to find one without the other. 
French usurers had powerful friends and enforcers, capable of bullying 
even Church authorities. How else would they have collected debts 
that were technically illegal? Hiromushime was utterly uncompromis- 
ing with her debtors — "showing no mercy whatsoever" — but then, her 
husband was the governor. She didn't have to show mercy. Those 
of us who do not have armed men behind us cannot afford to be 
so exacting. 

The way violence, or the threat of violence, turns human relations 
into mathematics will crop up again and again over the course of this 
book. It is the ultimate source of the moral confusion that seems to 
float around everything surrounding the topic of debt. The resulting 
dilemmas appear to be as old as civilization itself. We can observe the 
process in the very earliest records from ancient Mesopotamia; it finds 
its first philosophical expression in the Vedas, reappears in endless 
forms throughout recorded history, and still lies underneath the essen- 
tial fabric of our institutions today — state and market, our most basic 
conceptions of the nature of freedom, morality, sociality — all of which 
have been shaped by a history of war, conquest, and slavery in ways 
we're no longer capable of even perceiving because we can no longer 
imagine things any other way. 

There are obvious reasons why this is a particularly important moment 
to reexamine the history of debt. September 2008 saw the beginning of 



a financial crisis that almost brought the entire world economy screech- 
ing to a halt. In many ways the world economy did: ships stopped 
moving across the oceans, and thousands were placed in dry dock. 
Building cranes were dismantled, as no more buildings were being put 
up. Banks largely ceased making loans. In the wake of this, there was 
not only public rage and bewilderment, but the beginning of an actual 
public conversation about the nature of debt, of money, of the financial 
institutions that have come to hold the fate of nations in their grip. 

But that was just a moment. The conversation never ended up tak- 
ing place. 

The reason that people were ready for such a conversation was 
that the story everyone had been told for the last decade or so had just 
been revealed to be a colossal lie. There's really no nicer way to say 
it. For years, everyone had been hearing of a whole host of new, ultra- 
sophisticated financial innovations: credit and commodity derivatives, 
collateralized mortgage obligation derivatives, hybrid securities, debt 
swaps, and so on. These new derivative markets were so incredibly 
sophisticated, that — according to one persistent story — a prominent in- 
vestment house had to employ astrophysicists to run trading programs 
so complex that even the financiers couldn't begin to understand them. 
The message was transparent: leave these things to the professionals. 
You couldn't possibly get your minds around this. Even if you don't 
like financial capitalists very much (and few seemed inclined to argue 
that there was much to like about them), they were nothing if not capa- 
ble, in fact so preternaturally capable, that democratic oversight of fi- 
nancial markets was simply inconceivable. (Even a lot of academics fell 
for it. I well remember going to conferences in 2006 and 2007 where 
trendy social theorists presented papers arguing that these new forms 
of securitization, linked to new information technologies, heralded a 
looming transformation in the very nature of time, possibility — reality 
itself. I remember thinking: "Suckers!" And so they were.) 

Then, when the rubble had stopped bouncing, it turned out that 
many if not most of them had been nothing more than very elaborate 
scams. They consisted of operations like selling poor families mort- 
gages crafted in such a way as to make eventual default inevitable; 
taking bets on how long it would take the holders to default; packag- 
ing mortgage and bet together and selling them to institutional inves- 
tors (representing, perhaps, the mortgage-holders' retirement accounts) 
claiming that it would make money no matter what happened, and al- 
low said investors to pass such packages around as if they were money; 
turning over responsibility for paying off the bet to a giant insurance 
conglomerate that, were it to sink beneath the weight of its resultant 



debt (which certainly would happen), would then have to be bailed out 
by taxpayers (as such conglomerates were indeed bailed out). 11 In other 
words, it looks very much like an unusually elaborate version of what 
banks were doing when they lent money to dictators in Bolivia and 
Gabon in the late '70s: make utterly irresponsible loans with the full 
knowledge that, once it became known they had done so, politicians 
and bureaucrats would scramble to ensure that they'd still be reim- 
bursed anyway, no matter how many human lives had to be devastated 
and destroyed in order to do it. 

The difference, though, was that this time, the bankers were doing 
it on an inconceivable scale: the total amount of debt they had run up 
was larger than the combined Gross Domestic Products of every coun- 
try in the world — and it threw the world into a tailspin and almost 
destroyed the system itself. 

Armies and police geared up to combat the expected riots and 
unrest, but none materialized. But neither have any significant changes 
in how the system is run. At the time, everyone assumed that, with the 
very defining institutions of capitalism (Lehman Brothers, Citibank, 
General Motors) crumbling, and all claims to superior wisdom revealed 
to be false, we would at least restart a broader conversation about the 
nature of debt and credit institutions. And not just a convwersation. 

It seemed that most Americans were open to radical solutions. 
Surveys showed that an overwhelming majority of Americans felt that 
the banks should not be rescued, whatever the economic consequences, 
but that ordinary citizens stuck with bad mortgages should be bailed 
out. In the United States this is quite extraordinary. Since colonial days, 
Americans have been the population least sympathetic to debtors. In a 
way this is odd, since America was settled largely by absconding debt- 
ors, but it's a country where the idea that morality is a matter of pay- 
ing one's debts runs deeper than almost any other. In colonial days, an 
insolvent debtor's ear was often nailed to a post. The United States was 
one of the last countries in the world to adopt a law of bankruptcy: de- 
spite the fact that in 1787, the Constitution specifically charged the new 
government with creating one, all attempts were rejected on "moral 
grounds" until 1898. 12 The change was epochal. For this very reason, 
perhaps, those in charge of moderating debate in the media and legisla- 
tures decided that this was not the time. The United States government 
effectively put a three-trillion-dollar Band-Aid over the problem and 
changed nothing. The bankers were rescued; small-scale debtors — with 
a paltry few exceptions — were not. 13 To the contrary, in the middle of 
the greatest economic recession since the '30s, we are already begin- 
ning to see a backlash against them — driven by financial corporations 



who have now turned to the same government that bailed them out 
to apply the full force of the law against ordinary citizens in financial 
trouble. "It's not a crime to owe money," reports the Minneapolis-St. 
Paul StarTribune, "But people are routinely being thrown in jail for 
failing to pay debts." In Minnesota, "the use of arrest warrants against 
debtors has jumped 60 percent over the past four years, with 845 cases 
in 2009 ... In Illinois and southwest Indiana, some judges jail debtors 
for missing court-ordered debt payments. In extreme cases, people stay 
in jail until they raise a minimum payment. In January [2010], a judge 
sentenced a Kenney, 111., man 'to indefinite incarceration' until he came 
up with $300 toward a lumber yard debt." 14 

In other words, we are moving toward a restoration of some- 
thing much like debtors' prisons. Meanwhile, the conversation stopped 
dead, popular rage against bailouts sputtered into incoherence, and 
we seem to be tumbling inexorably toward the next great financial 
catastrophe — the only real question being just how long it will take. 

We have reached the point at which the IMF itself, now trying to 
reposition itself as the conscience of global capitalism, has begun to 
issue warnings that if we continue on the present course, no bailout 
is likely to be forthcoming the next time. The public simply will not 
stand for it, and as a result, everything really will come apart. "IMF 
Warns Second Bailout Would 'Threaten Democracy'" reads one recent 
headline. 15 (Of course by "democracy" they mean "capitalism.") Surely 
it means something that even those who feel they are responsible for 
keeping the current global economic system running, who just a few 
years ago acted as if they could simply assume the current system 
would be around forever, are now seeing apocalypse everywhere. 

In this case, the IMF has a point. We have every reason to believe that 
we do indeed stand on the brink of epochal changes. 

Admittedly, the usual impulse is to imagine everything around us 
as absolutely new. Nowhere is this so true as with money. How many 
times have we been told that the advent of virtual money, the dema- 
terialization of cash into plastic and dollars into blips of electronic 
information, has brought us to an unprecedented new financial world? 
The assumption that we were in such uncharted territory, of course, 
was one of the things that made it so easy for the likes of Goldman 
Sachs and AIG to convince people that no one could possibly under- 
stand their dazzling new financial instruments. The moment one casts 
matters on a broad historical scale, though, the first thing one learns 



is that there's nothing new about virtual money. Actually, this was the 
original form of money. Credit system, tabs, even expense accounts, all 
existed long before cash. These things are as old as civilization itself. 
True, we also find that history tends to move back and forth between 
periods dominated by bullion — where it's assumed that gold and silver 
are money — and periods where money is assumed to be an abstrac- 
tion, a virtual unit of account. But historically, credit money comes 
first, and what we are witnessing today is a return of assumptions that 
would have been considered obvious common sense in, say, the Middle 
Ages — or even ancient Mesopotamia. 

But history does provide fascinating hints of what we might expect. 
For instance: in the past, ages of virtual credit money almost invari- 
ably involve the creation of institutions designed to prevent everything 
going haywire — to stop the lenders from teaming up with bureaucrats 
and politicians to squeeze everybody dry, as they seem to be doing 
now. They are accompanied by the creation of institutions designed to 
protect debtors. The new age of credit money we are in seems to have 
started precisely backwards. It began with the creation of global insti- 
tutions like the IMF designed to protect not debtors, but creditors. At 
the same time, on the kind of historical scale we're talking about here, 
a decade or two is nothing. We have very little idea what to expect.' 

This book is a history of debt, then, but it also uses that history as 
a way to ask fundamental questions about what human beings and 
human society are or could be like — what we actually do owe each 
other, what it even means to ask that question. As a result, the book 
begins by attempting to puncture a series of myths — not only the Myth 
of Barter, which is taken up in the first chapter, but also rival myths 
about primordial debts to the gods, or to the state — that in one way or 
another form the basis of our common-sense assumptions about the na- 
ture of economy and society. In that common-sense view, the State and 
the Market tower above all else as diametrically opposed principles. 
Historical reality reveals, however, that they were born together and 
have always been intertwined. The one thing that all these misconcep- 
tions have in common, we will find, is that they tend to reduce all hu- 
man relations to exchange, as if our ties to society, even to the cosmos 
itself, can be imagined in the same terms as a business deal. This leads 
to another question: If not exchange, then what? In chapter five, I will 
begin to answer the question by drawing on the fruits of anthropol- 
ogy to describe a view of the moral basis of economic life; then return 



to the question of the origins of money to demonstrate how the very 
principle of exchange emerged largely as an effect of violence — that the 
real origins of money are to be found in crime and recompense, war 
and slavery, honor, debt, and redemption. That, in turn, opens the way 
to starting, with chapter eight, an actual history of the last five thou- 
sand years of debt and credit, with its great alternations between ages 
of virtual and physical money. Many of the discoveries here are pro- 
foundly unexpected: from the origins of modern conceptions of rights 
and freedoms in ancient slave law, to the origins of investment capital 
in medieval Chinese Buddhism, to the fact that many of Adam Smith's 
most famous arguments appear to have been cribbed from the works 
of free-market theorists from medieval Persia (a story which, inciden- 
tally, has interesting implications for understanding the current appeal 
of political Islam). All of this sets the stage for a fresh approach to the 
last five hundred years, dominated by capitalist empires, and allows us 
to at least begin asking what might really be at stake in the present day. 

For a very long time, the intellectual consensus has been that we 
can no longer ask Great Questions. Increasingly, it's looking like we 
have no other choice. 

Chapter Two 


For every subtle and complicated 
question, there is a perfectly simple 
and straightforward answer, which is 

— H.L. Mencken 

WHAT IS THE DIFFERENCE between a mere obligation, a sense that 
one ought to behave in a certain way, or even that one owes something 
to someone, and a debt, properly speaking? The answer is simple: 
money. The difference between a debt and an obligation is that a debt 
can be precisely quantified. This requires money. 

Not only is it money that makes debt possible: money and debt ap- 
pear on the scene at exactly the same time. Some of the very first writ- 
ten documents that have come down to us are Mesopotamian tablets 
recording credits and debits, rations issued by temples, money owed 
for rent of temple lands, the value of each precisely specified in grain 
and silver. Some of the earliest works of moral philosophy, in turn, are 
reflections on what it means to imagine morality as debt — that is, in 
terms of money. 

A history of debt, then, is thus necessarily a history of money — and 
the easiest way to understand the role that debt has played in human 
society is simply to follow the forms that money has taken, and the 
way money has been used, across the centuries — and the arguments 
that inevitably ensued about what all this means. Still, this is neces- 
sarily a very different history of money than we are used to. When 
economists speak of the origins of money, for example, debt is always 
something of an afterthought. First comes barter, then money; credit 
only develops later. Even if one consults books on the history of money 
in, say, France, India, or China, what one generally gets is a history 
of coinage, with barely any discussion of credit arrangements at all. 
For almost a century, anthropologists like me have been pointing out 



that there is something very wrong with this picture. The standard 
economic-history version has little to do with anything we observe 
when we examine how economic life is actually conducted, in real 
communities and marketplaces, almost anywhere — where one is much 
more likely to discover everyone in debt to everyone else in a dozen 
different ways, and that most transactions take place without the use 
of currency. 

Why the discrepancy? 

Some of it is just the nature of the evidence: coins are preserved in 
the archeological record; credit arrangements usually are not. Still, the 
problem runs deeper. The existence of credit and debt has always been 
something of a scandal for economists, since it's almost impossible to 
pretend that those lending and borrowing money are acting on purely 
"economic" motivations (for instance, that a loan to a stranger is the 
same as a loan to one's cousin); it seems important, therefore, to begin 
the story of money in an imaginary world from which credit and debt 
have been entirely erased. Before we can apply the tools of anthropol- 
ogy to reconstruct the real history of money, we need to understand 
what's wrong with the conventional account. 

Economists generally speak of three functions of money: medium 
of exchange, unit of account, and store of value. All economic text- 
books treat the first as primary. Here's a fairly typical extract from 
Economics, by Case, Fair, Gartner, and Heather (1996): 

Money is vital to the working of a market economy. Imagine 
what life would be like without it. The alternative to a mon- 
etary economy is barter, people exchanging goods and services 
for other goods and services directly instead of exchanging via 
the medium of money. 

How does a barter system work? Suppose you want crois- 
sants, eggs and orange juice for breakfast. Instead of going to 
the grocer's and buying these things with money, you would 
have to find someone who has these items and is willing to 
trade them. You would also have to have something the baker, 
the orange juice purveyor and the egg vendor want. Having 
pencils to trade will do you no good if the baker and the or- 
ange juice and egg sellers do not want pencils. 

A barter system requires a double coincidence of wants for 
trade to take place. That is, to effect a trade, I need not only 
have to find someone who has what I want, but that person 
must also want what I have. Where the range of traded goods 
is small, as it is in relatively unsophisticated economies, it is 



not difficult to find someone to trade with, and barter is often 
used. 1 

This latter point is questionable, but it's phrased in so vague a way that 
it would be hard to disprove. 

In a complex society with many goods, barter exchanges in- 
volve an intolerable amount of effort. Imagine trying to find 
people who offer for sale all the things you buy in a typical trip 
to the grocer's, and who are willing to accept goods that you 
have to offer in exchange for their goods. 

Some agreed-upon medium of exchange (or means of pay- 
ment) neatly eliminates the double coincidence of wants prob- 
lem. 2 

It's important to emphasize that this is not presented as something 
that actually happened, but as a purely imaginary exercise. "To see 
that society benefits from a medium of exchange" write Begg, Fischer 
and Dornbuch {Economics, 2005), "imagine a barter economy." "Imag- 
ine the difficulty you would have today," write Maunder, Myers, Wall, 
and Miller {Economics Explained, 1991), "if you had to exchange your 
labor directly for the fruits of someone else's labor." "Imagine," write 
Parkin and King {Economics, 1995), "you have roosters, but you want 
roses." 3 One could multiply examples endlessly. Just about every eco- 
nomics textbook employed today sets out the problem the same way. 
Historically, they note, we know that there was a time when there 
was no money. What must it have been like? Well, let us imagine an 
economy something like today's, except with no money. That would 
have been decidedly inconvenient! Surely, people must have invented 
money for the sake of efficiency. 

The story of money for economists always begins with a fantasy 
world of barter. The problem is where to locate this fantasy in time 
and space: Are we talking about cave men, Pacific Islanders, the Ameri- 
can frontier? One textbook, by economists Joseph Stiglitz and John 
Driffill, takes us to what appears to be an imaginary New England or 
Midwestern town: 

One can imagine an old-style farmer bartering with the black- 
smith, the tailor, the grocer, and the doctor in his small town. 
For simple barter to work, however, there must be a double 
coincidence of wants . . . Henry has potatoes and wants shoes, 
Joshua has an extra pair of shoes and wants potatoes. Bartering 



can make them both happier. But if Henry has firewood and 
Joshua does not need any of that, then bartering for Joshua's 
shoes requires one or both of them to go searching for more 
people in the hope of making a multilateral exchange. Money 
provides a way to make multilateral exchange much simpler. 
Henry sells his firewood to someone else for money and uses 
the money to buy Joshua's shoes. 4 

Again this is just a make-believe land much like the present, except 
with money somehow plucked away. As a result it makes no sense: 
Who in their right mind would set up a grocery in such a place? And 
how would they get supplies? But let's leave that aside. There is a 
simple reason why everyone who writes an economics textbook feels 
they have to tell us the same story. For economists, it is in a very real 
sense the most important story ever told. It was by telling it, in the 
significant year of 1776, that Adam Smith, professor of moral philoso- 
phy at the University of Glasgow, effectively brought the discipline of 
economics into being. 

He did not make up the story entirely out of whole cloth. Already 
in 330 bc, Aristotle was speculating along vaguely similar lines in his 
treatise on politics. At first, he suggested, families must have produced 
everything they needed for themselves. Gradually, some would presum- 
ably have specialized, some growing corn, others making wine, swap- 
ping one for the other. 5 Money, Aristotle assumed, must have emerged 
from such a process. But, like the medieval schoolmen who occasion- 
ally repeated the story, Aristotle was never clear as to how. 6 

In the years after Columbus, as Spanish and Portuguese adven- 
turers were scouring the world for new sources of gold and silver, 
these vague stories disappear. Certainly no one reported discovering a 
land of barter. Most sixteenth- and seventeenth-century travelers in the 
West Indies or Africa assumed that all societies would necessarily have 
their own forms of money, since all societies had governments and all 
governments issued money. 7 

Adam Smith, on the other hand, was determined to overturn the 
conventional wisdom of his day. Above all, he objected to the notion 
that money was a creation of government. In this, Smith was the intel- 
lectual heir of the Liberal tradition of philosophers like John Locke, 
who had argued that government begins in the need to protect private 
property and operated best when it tried to limit itself to that function. 
Smith expanded on the argument, insisting that property, money and 
markets not only existed before political institutions but were the very 
foundation of human society. It followed that insofar as government 



should play any role in monetary affairs, it should limit itself to guar- 
anteeing the soundness of the currency. It was only by making such an 
argument that he could insist that economics is itself a field of human 
inquiry with its own principles and laws — that is, as distinct from, say 
ethics or politics. 

Smith's argument is worth laying out in detail because it is, as I 
say, the great founding myth of the discipline of economics. 

What, he begins, is the basis of economic life, properly speaking? 
It is "a certain propensity in human nature . . . the propensity to truck, 
barter, and exchange one thing for another." Animals don't do this. 
"Nobody," Smith observes, "ever saw a dog make a fair and deliberate 
exchange of one bone for another with another dog." 8 But humans, if 
left to their own devices, will inevitably begin swapping and comparing 
things. This is just what humans do. Even logic and conversation are 
really just forms of trading, and as in all things, humans will always 
try to seek their own best advantage, to seek the greatest profit they 
can from the exchange. 9 

It is this drive to exchange, in turn, which creates that division of 
labor responsible for all human achievement and civilization. Here the 
scene shifts to another one of those economists' faraway fantasylands — 
it seems to be an amalgam of North American Indians and Central 
Asian pastoral nomads: 10 

In a tribe of hunters or shepherds a particular person makes 
bows and arrows, for example, with more readiness and dex- 
terity than any other. He frequently exchanges them for cattle 
or for venison with his companions; and he finds at last that 
he can in this manner get more cattle and venison, than if he 
himself went to the field to catch them. From a regard to his 
own interest, therefore, the making of bows and arrows grows 
to be his chief business, and he becomes a sort of armourer. 
Another excels in making the frames and covers of their little 
huts or moveable houses. He is accustomed to be of use in this 
way to his neighbours, who reward him in the same manner 
with cattle and with venison, till at last he finds it his interest 
to dedicate himself entirely to this employment, and to become 
a sort of house-carpenter. In the same manner a third becomes 
a smith or a brazier; a fourth a tanner or dresser of hides or 
skins, the principal- part of the clothing of savages . . . 

It's only once we have expert arrow-makers, wigwam-makers, and 
so on that people start realizing there's a problem. Notice how, as in 



so many examples, we have a tendency to slip from imaginary savages 
to small-town shopkeepers. 

' But when the division of labor first began to take place, this 
power of exchanging must frequently have been very much 
clogged and embarrassed in its operations. One man, we shall 
suppose, has more of a certain commodity than he himself has 
occasion for, while another has less. The former consequently 
would be glad to dispose of, and the latter to purchase, a part 
of this superfluity. But if this latter should chance to have noth- 
ing that the former stands in need of, no exchange can be made 
between them. The butcher has more meat in his shop than 
he himself can consume, and the brewer and the baker would 
each of them be willing to purchase a part of it. But they have 
nothing to offer in exchange . . . 

In order to avoid the inconveniency of such situations, every 
prudent man in every period of society, after the first establish- 
ment of the division of labor, must naturally have endeavored 
to manage his affairs in such a manner, as to have at all times 
by him, besides the peculiar produce of his own industry, a 
certain quantity of some one commodity or other, such as he 
imagined that few people would be likely to refuse in exchange 
for the produce of their industry." 

So everyone will inevitably start stockpiling something they figure 
that everyone else is likely to want. This has a paradoxical effect, 
because at a certain point, rather than making that commodity less 
valuable (since everyone already has some) it becomes more valuable 
(because it becomes, effectively, currency): 

Salt is said to be the common instrument of commerce and 
exchanges in Abyssinia; a species of shells in some parts of 
the coast of India; dried cod at Newfoundland; tobacco in 
Virginia; sugar in some of our West India colonies; hides or 
dressed leather in some other countries; and there is at this day 
a village in Scotland where it is not uncommon, I am told, for 
a workman to carry nails instead of money to the baker's shop 
or the ale-house.' 2 



Eventually, of course, at least for long-distance trade, it all boils 
down to precious metals, since these are ideally suited to serve as cur- 
rency, being durable, portable, and able to be endlessly subdivided into 
identical portions. 

Different metals have been made use of by different nations 
for this purpose. Iron was the common instrument of com- 
merce among the ancient Spartans; copper among the ancient 
Romans; and gold and silver among all rich and commercial 

Those metals seem originally to have been made use of for this 
purpose in rude bars, without any stamp or coinage . . . 

The use of metals in this rude state was attended with two very 
considerable inconveniencies; first with the trouble of weigh- 
ing; and, secondly, with that of assaying them. In the precious 
metals, where a small difference in the quantity makes a great 
difference in the value, even the business of weighing, with 
proper exactness, requires at least very accurate weights and 
scales. The weighing of gold in particular is an operation of 
some nicety . . . 13 

It's easy to see where this is going. Using irregular metal ingots is 
easier than barter, but wouldn't standardizing the units — say, stamp- 
ing pieces of metal with uniform designations guaranteeing weight and 
fineness, in different denominations — make things easier still? Clearly it 
would, and so was coinage born. True, issuing coinage meant govern- 
ments had to get involved, since they generally ran the mints; but in the 
standard version of the story, governments have only this one limited 
role — to guarantee the money supply — and tend to do it badly, since 
throughout history, unscrupulous kings have often cheated by debasing 
the coinage and causing inflation and other sorts of political havoc in 
what was originally a matter of simple economic common sense. 

Tellingly, this story played a crucial role not only in founding the 
discipline of economics, but in the very idea that there was something 
called "the economy," which operated by its own rules, separate from 
moral or political life, that economists could take as their field of study. 



"The economy" is where we indulge in our natural propensity to truck 
and barter. We are still trucking and bartering. We always will be. 
Money is simply the most efficient means. 

Economists like Karl Menger and Stanley Jevons later improved 
on the details of the story, most of all by adding various mathemati- 
cal equations to demonstrate that a random assortment of people with 
random desires could, in theory, produce not only a single commodity 
to use as money but a uniform price system. In the process, they also 
substituted all sorts of impressive technical vocabulary (i.e., "inconve- 
niences" became "transaction costs"). The crucial thing, though, is that 
by now, this story has become simple common sense for most people. 
We teach it to children in schoolbooks and museums. Everybody knows 
it. "Once upon a time, there was barter. It was difficult. So people in- 
vented money. Then came the development of banking and credit." It 
all forms a perfectly simple, straightforward progression, a process of 
increasing sophistication and abstraction that has carried humanity, 
logically and inexorably, from the Stone Age exchange of mastodon 
tusks to stock markets, hedge funds, and securitized derivatives.' 4 

It really has become ubiquitous. Wherever we find money, we also 
find the story. At one point, in the town of Arivonimamo, in Madagas- 
car, I had the privilege of interviewing a Kalanoro, a tiny ghostly crea- 
ture that a local spirit medium claimed to keep hidden away in a chest 
in his home. The spirit belonged to the brother of a notorious local 
loan shark, a horrible woman named Nordine, and to be honest I was 
a bit reluctant to have anything to do with the family, but some of my 
friends insisted — since after all, this was a creature from ancient times. 
The creature spoke from behind a screen in an eerie, otherworldly qua- 
ver. But all it was really interested in talking about was money. Finally, 
slightly exasperated by the whole charade, I asked, "So, what did you 
use for money back in ancient times, when you were still alive?" 

The mysterious voice immediately replied, "No. We didn't use 
money. In ancient times we used to barter commodities directly, one 
for the other ..." 

The story, then, is everywhere. It is the founding myth of our system of 
economic relations. It is so deeply established in common sense, even 
in places like Madagascar, that most people on earth couldn't imagine 
any other way that money possibly could have come about. 

The problem is there's no evidence that it ever happened, and an 
enormous amount of evidence suggesting that it did not. 



For centuries now, explorers have been trying to find this fabled 
land of barter — none with success. Adam Smith set his story in aborigi- 
nal North America (others preferred Africa or the Pacific). In Smith's 
time, at least it could be said that reliable information on Native Amer- 
ican economic systems was unavailable in Scottish libraries. But by 
mid-century, Lewis Henry Morgan's descriptions of the Six Nations 
of the Iroquois, among others, were widely published — and they made 
clear that the main economic institution among the Iroquois nations 
were longhouses where most goods were stockpiled and then allocated 
by women's councils, and no one ever traded arrowheads for slabs of 
meat. Economists simply ignored this information. 15 Stanley Jevons, 
for example, who in 1871 wrote what has come to be considered the 
classic book on the origins of money, took his examples straight from 
Smith, with Indians swapping venison for elk and beaver hides, and 
made no use of actual descriptions of Indian life that made it clear that 
Smith had simply made this up. Around that same time, missionaries, 
adventurers, and colonial administrators were fanning out across the 
world, many bringing copies of Smith's book with them, expecting to 
find the land of barter. None ever did. They discovered an almost end- 
less variety of economic systems. But to this day, no one has been able 
to locate a part of the world where the ordinary mode of economic 
transaction between neighbors takes the form of "I'll give you twenty 
chickens for that cow." 

The definitive anthropological work on barter, by Caroline Hum- 
phrey, of Cambridge, could not be more definitive in its conclusions: 
"No example of a barter economy, pure and simple, has ever been 
described, let alone the emergence from it of money; all available eth- 
nography suggests that there never has been such a thing." 1 * 

Now, all this hardly means that barter does not exist — or even 
that it's never practiced by the sort of people that Smith would refer to 
as "savages." It just means that it's almost never employed, as Smith 
imagined, between fellow villagers. Ordinarily, it takes place between 
strangers, even enemies. Let us begin with the Nambikwara of Brazil. 
They would seem to fit all the criteria: they are a simple society with- 
out much in the way of division of labor, organized into small bands 
that traditionally numbered at best a hundred people each. Occasion- 
ally if one band spots the cooking fires of another in their vicinity, they 
will send emissaries to negotiate a meeting for purposes of trade. If the 
offer is accepted, they will first hide their women and children in the 
forest, then invite the men of other band to visit camp. Each band has 
a chief; once everyone has been assembled, each chief gives a formal 
speech praising the other party and belittling his own; everyone puts 



aside their weapons to sing and dance together — though the dance is 
one that mimics military confrontation. Then, individuals from each 
side approach each other to trade: 

If an individual wants an object he extols it by saying how fine 
it is. If a man values an object and wants much in exchange for 
it, instead of saying that it is very valuable he says that it is no 
good, thus showing his desire to keep it. "This axe is no good, 
it is very old, it is very dull," he will say, referring to his axe 
which the other wants. 

This argument is carried on in an angry tone of voice un- 
til a settlement is reached. When agreement has been reached 
each snatches the object out of the other's hand. If a man has 
bartered a necklace, instead of taking it off and handing it 
over, the other person must take it off with a show of force. 
Disputes, often leading to fights, occur when one party is a 
little premature and snatches the object before the other has 
finished arguing. 17 

The whole business concludes with a great feast at which the wom- 
en reappear, but this too can lead to problems, since amidst the music 
and good cheer, there is ample opportunity for seductions. 18 This some- 
times led to jealous quarrels. Occasionally, people would get killed. 

Barter, then, for all the festive elements, was carried out be- 
tween people who might otherwise be enemies and hovered about an 
inch away from outright warfare — and, if the ethnographer is to be 
believed — if one side later decided they had been taken advantage of, it 
could very easily lead to actual wars. 

To shift our spotlight halfway around the world to Western Arn- 
hem Land in Australia, where the Gunwinggu people are famous for 
entertaining neighbors in rituals of ceremonial barter called the dza- 
malag. Here the threat of actual violence seems much more distant. 
Partly, this is because things are made easier by the existence of a moi- 
ety system that embraces the whole region: no one is allowed to marry, 
or even have sex with, people of their own moiety, no matter where 
they come from, but anyone from the other is technically a potential 
match. Therefore, for a man, even in distant communities, half the 
women are strictly forbidden, half of them fair game. The region is also 
united by local specialization: each people has its own trade product to 
be bartered with the others. 

What follows is from a description of a dzamalag held in the 1940s, 
as observed by an anthropologist named Ronald Berndt. 



Once again, it begins as strangers, after some initial negotiations, 
are invited into the hosts' main camp. The visitors in this particular 
example were famous for their "much-prized serrated spears" — their 
hosts had access to good European cloth. The trading begins when 
the visiting party, which consisted of both men and women, enters 
the camp's dancing ground of "ring place," and three of them began 
to entertain their hosts with music. Two men start singing, a third ac- 
companies them on the didjeridu. Before long, women from the hosts' 
side come and attack the musicians: 

Men and women rise and begin to dance. The dzamalag opens 
when two Gunwinggu women of the opposite moiety to the 
singing men "give dzamalag" to the latter. They present each 
man with a piece of cloth, and hit or touch him, pulling him 
down on the ground, calling him a dzamalag husband, and 
joking with him in an erotic vein. Then another woman of the 
opposite moiety to the pipe player gives him cloth, hits and 
jokes with him. 

This sets in motion the dzamalag exchange. Men from the 
visiting group sit quietly while women of the opposite moiety 
come over and give them cloth, hit them, and invite them to 
copulate; they take any liberty they choose with the men, amid 
amusement and applause, while the singing and dancing con- 
tinue. Women try to undo the men's loin coverings or touch 
their penises, and to drag them from the "ring place" for co- 
itus. The men go with their dzamalag partners, with a show of 
reluctance, to copulate in the bushes away from the fires which 
light up the dancers. They may give the women tobacco or 
beads. When the women return, they give part of this tobacco 
to their own husbands, who have encouraged them to go dza- 
malag. The husbands, in turn, use the tobacco to pay their own 
female dzamalag partners . . 

New singers and musicians appear, are again assaulted and dragged 
off to the bushes; men encourage their wives "not to be shy," so as to 
maintain the Gunwinggu reputation for hospitality; eventually those 
men also take the initiative with the visitors' wives, offering cloth, hit- 
ting them, and leading them off into the bushes. Beads and tobacco 
circulate. Finally, once participants have all paired off at least once, 
and the guests are satisfied with the cloth they have acquired, the 
women stop dancing and stand in two rows and the visitors line up to 
repay them. 



Then visiting men of one moiety dance towards the women 
of the opposite moiety, in order to "give them dzamalag." 
They hold shovel-nosed spears poised, pretending to spear the 
women, but instead hit them with the flat of the blade. "We 
will not spear you, for we have already speared you with our 
penises." They present the spears to the women. Then visiting 
men of the other moiety go through the same actions with the 
women of their opposite moiety, giving them spears with ser- 
rated points. This terminates the ceremony, which is followed 
by a large distribution of food. 20 

This is a particularly dramatic case, but dramatic cases are reveal- 
ing. What the Gunwinggu hosts appear to have been able to do here, 
owing to the relatively amicable relations between neighboring peoples 
in Western Arnhem Land, is to take all the elements in Nambikwara 
barter (the music and dancing, the potential hostility, the sexual in- 
trigue), and turn it all into a kind of festive game — one not, perhaps, 
without its dangers, but (as the ethnographer emphasizes) considered 
enormous fun by everyone concerned. 

What all such cases of trade through barter have in common is that 
they are meetings with strangers who will, likely as not, never meet 
again, and with whom one certainly will not enter into any ongoing re- 
lations. This is why a direct one-on-one exchange is appropriate: each 
side makes their trade and walks away. It's all made possible by laying 
down an initial mantle of sociability, in the form of shared pleasures, 
music and dance — the usual base of conviviality on which trade must 
always be built. Then comes the actual trading, where both sides make 
a great display of the latent hostility that necessarily exists in any ex- 
change of material goods between strangers — where neither party has 
no particular reason not to take advantage of the other — by playful 
mock aggression, though in the Nambikwara case, where the mantle 
of sociability is extremely thin, mock aggression is in constant danger 
of slipping over into the real thing. The Gunwinggu, with their more 
relaxed attitude toward sexuality, have quite ingeniously managed to 
make the shared pleasures and aggression into exactly the same thing. 

Recall here the language of the economics textbooks: "Imagine a 
society without money." "Imagine a barter economy." One thing these 
examples make abundantly clear is just how limited the imaginative 
powers of most economists turn out to be. 21 

Why? The simplest answer would be: for there to even be a disci- 
pline called "economics," a discipline that concerns itself first and fore- 
most with how individuals seek the most advantageous arrangement 



for the exchange of shoes for potatoes, or cloth for spears, it must 
assume that the exchange of such goods need have nothing to do with 
war, passion, adventure, mystery, sex, or death. Economics assumes a 
division between different spheres of human behavior that, among peo- 
ple like the Gunwinngu and the Nambikwara, simply does not exist. 
These divisions in turn are made possible by very specific institutional 
arrangements: the existence of lawyers, prisons, and police, to ensure 
that even people who don't like each other very much, who have no 
interest in developing any kind of ongoing relationship, but are simply 
interested in getting their hands on as much of the others' possessions 
as possible, will nonetheless refrain from the most obvious expedient 
(theft). This in turn allows us to assume that life is neatly divided be- 
tween the marketplace, where we do our shopping, and the "sphere 
of consumption," where we concern ourselves with music, feasts, and 
seduction. In other words, the vision of the world that forms the basis 
of the economics textbooks, which Adam Smith played so large a part 
in promulgating, has by now become so much a part of our common 
sense that we find it hard to imagine any other possible arrangement. 

From these examples, it begins to be clear why there are no societ- 
ies based on barter. Such a society could only be one in which every- 
body was an inch away from everybody else's throat; but nonetheless 
hovering there, poised to strike but never actually striking, forever. 
True, barter does sometimes occur between people who do not consid- 
er each other strangers, but they're usually people who might as well be 
strangers — that is, who feel no sense of mutual responsibility or trust, 
or the desire to develop ongoing relations. The Pukhtun of Northern 
Pakistan, for instance, are famous for their open-handed hospitality. 
Barter is what you do with those to whom you are not bound by ties 
of hospitality (or kinship, or much of anything else): 

A favorite mode of exchange among men is barter, or adal- 
badal (give and take). Men are always on the alert for the 
possibility of bartering one of their possessions for something 
better. Often the exchange is like for like: a radio for a radio, 
sunglasses for sunglasses, a watch for a watch. However, un- 
like objects can also be exchanged, such as, in one instance, a 
bicycle for two donkeys. Adal-badal is always practiced with 
non-relatives and affords men a great deal of pleasure as they 
attempt to get the advantage over their exchange partner. A 
good exchange, in which a man feels he has gotten the better 
of the deal, is cause for bragging and pride. If the exchange is 
bad, the recipient tries to renege on the deal or, failing that, to 



palm off the faulty object on someone unsuspecting. The best 
partner in adal-badal is someone who is distant spatially and 
will therefore have little opportunity to complain. 22 

Neither are such unscrupulous motives limited to Central Asia. 
They seem inherent to the very nature of barter — which would explain 
the fact that in the century or two before Smith's time, the English 
words "truck and barter," like their equivalents in French, Spanish, 
German, Dutch, and Portuguese, literally meant "to trick, bamboozle, 
or rip off." 23 Swapping one thing directly for another while trying to 
get the best deal one can out of the transaction is, ordinarily, how 
one deals with people one doesn't care about and doesn't expect to 
see again. What reason is there not to try to take advantage of such 
a person? If, on the other hand, one cares enough about someone — a 
neighbor, a friend — to wish to deal with her fairly and honestly, one 
will inevitably also care about her enough to take her individual needs, 
desires, and situation into account. Even if you do swap one thing for 
another, you are likely to frame the matter as a gift. 

To illustrate what I mean by this, let's return to the economics text- 
books and the problem of the "double coincidence of wants." When 
we left Henry, he needed a pair of shoes, but all he had lying around 
were some potatoes. Joshua had an extra pair of shoes, but he didn't 
really need potatoes. Since money has not yet been invented, they have 
a problem. What are they to do? 

The first thing that should be clear by now is that we'd really have 
to know a bit more about Joshua and Henry. Who are they? Are they 
related? If so, how? They appear to live in a small community. Any two 
people who have been living their lives in the same small community 
will have some sort of complicated history with each other. Are they 
friends, rivals, allies, lovers, enemies, or several of these things at once? 

The authors of the original example seem to assume two neighbors 
of roughly equal status, not closely related, but on friendly terms — that 
is, as close to neutral equality as one can get. Even so, this doesn't say 
much. For example, if Henry was living in a Seneca longhouse, and 
needed shoes, Joshua would not even enter into it; he'd simply men- 
tion it to his wife, who'd bring up the matter with the other matrons, 
fetch materials from the longhouse's collective storehouse, and sew him 
some. Alternately, to find a scenario fit for an imaginary economics 



textbook, we might place Joshua and Henry together in a small, inti- 
mate community like a Nambikwara or Gunwinggu band. 


Henry walks up to Joshua and says "Nice shoes!" 

Joshua says, "Oh, they're not much, but since you seem to like 
them, by all means take them." 

Henry takes the shoes. 

Henry's potatoes are not at issue since both parties are perfectly 
well aware that if Joshua were ever short of potatoes, Henry would 
give him some. 

And that's about it. Of course it's not clear, in this case, how long 
Henry will actually get to keep the shoes. It probably depends on how 
nice they are. If they were just ordinary shoes, this might be the end of 
the matter. If they are in any way unique or beautiful, they might end 
up being passed around. There's a famous story that John and Lorna 
Marshall, who carried out a study of Kalahari Bushmen in the '60s, 
once gave a knife to one of their favorite informants. They left and 
came back a year later, only to discover that pretty much everyone in 
the band had been in possession of the knife at some point in between. 
On the other hand, several Arab friends confirm to me that in less 
strictly egalitarian contexts, there is an expedient. If a friend praises a 
bracelet or bag, you are normally expected to immediately say "take 
it" — but if you are really determined to hold on to it, you can always 
say, "yes, isn't it beautiful? It was a gift." 

But clearly, the authors of the textbook have a slightly more im- 
personal transaction in mind. The authors seem to imagine the two 
men as the heads of patriarchal households, on good terms with each 
other, but who keep their own supplies. Perhaps they live in one of 
those Scottish villages with the butcher and the baker in Adam Smith's 
examples, or a colonial settlement in New England. Except for some 
reason they've never heard of money. It's a peculiar fantasy, but let's 
see what we can do: 


Henry walks up to Joshua and says, "Nice shoes!" 

Or, perhaps — let's make this a bit more realistic — Henry's wife 
is chatting with Joshua's and strategically lets slip that the state of 
Henry's shoes is getting so bad he's complaining about corns. 



The message is conveyed, and Joshua comes by the next day to 
offer his extra pair to Henry as a present, insisting that this is just 
a neighborly gesture. He would certainly never want anything in 

It doesn't matter whether Joshua is sincere in saying this. By do- 
ing so, Joshua thereby registers a credit. Henry owes him one. 

How might Henry pay Joshua back? There are endless possi- 
bilities. Perhaps Joshua really does want potatoes. Henry waits a 
discrete interval and drops them off, insisting that this too is just a 
gift. Or Joshua doesn't need potatoes now but Henry waits until he 
does. Or maybe a year later, Joshua is planning a banquet, so he 
comes strolling by Henry's barnyard and says "Nice pig . . ." 

In any of these scenarios, the problem of "double coincidence of 
wants," so endlessly invoked in the economics textbooks, simply disap- 
pears. Henry might not have something Joshua wants right now. But 
if the two are neighbors, it's obviously only a matter of time before 
he will. 24 

This in turn means that the need to stockpile commonly acceptable 
items in the way that Smith suggested disappears as well. With it goes 
the need to develop currency. As with so many actual small communi- 
ties, everyone simply keeps track of who owes what to whom. 

There is just one major conceptual problem here — one the atten- 
tive reader might have noticed. Henry "owes Joshua one." One what? 
How do you quantify a favor? On what basis do you say that this 
many potatoes, or this big a pig, seems more or less equivalent to a 
pair of shoes? Because even if these things remain rough-and-ready ap- 
proximations, there must be some way to establish that X is roughly 
equivalent to Y, or slightly worse or slightly better. Doesn't this imply 
that something like money, at least in the sense of a unit of accounts 
by which one can compare the value of different objects, already has 
to exist? 

In most gift economies, there actually is a rough-and-ready way 
to solve the problem. One establishes a series of ranked categories of 
types of thing. Pigs and shoes may be considered objects of roughly 
equivalent status, one can give one in return for the other; coral neck- 
laces are quite another matter, one would have to give back another 
necklace, or at least another piece of jewelry — anthropologists are used 
to referring to these as creating different "spheres of exchange." 25 This 
does simplify things somewhat. When cross-cultural barter becomes a 
regular and unexceptional thing, it tends to operate according to simi- 
lar principles: there are only certain things traded for certain others 



(cloth for spears, for example), which makes it easy to work out tra- 
ditional equivalences. However, this doesn't help us at all with the 
problem of the origin of money. Actually, it makes it infinitely worse. 
Why stockpile salt or gold or fish if they can only be exchanged for 
some things and not others? 

In fact, there is good reason to believe that barter is not a par- 
ticularly ancient phenomenon at all, but has only really become wide- 
spread in modern times. Certainly in most of the cases we know about, 
it takes place between people who are familiar with the use of money, 
but for one reason or another, don't have a lot of it around. Elaborate 
barter systems often crop up in the wake of the collapse of national 
economies: most recently in Russia in the '90s, and in Argentina around 
2002, when rubles in the first case, and dollars in the second, effectively 
disappeared. 26 Occasionally one can even find some kind of currency 
beginning to develop: for instance, in POW camps and many prisons, 
inmates have indeed been known to use cigarettes as a kind of cur- 
rency, much to the delight and excitement of professional economists. 27 
But here too we are talking about people who grew up using money 
and now have to make do without it — exactly the situation "imagined" 
by the economics textbooks with which I began. 

The more frequent solution is to adopt some sort of credit system. 
When much of Europe "reverted to barter" after the collapse of the 
Roman Empire, and then again after the Carolingian Empire likewise 
fell apart, this seems to be what happened. People continued keeping 
accounts in the old imperial currency, even if they were no longer us- 
ing coins. 28 Similarly, the Pukhtun men who like to swap bicycles for 
donkeys are hardly unfamiliar with the use of money. Money has ex- 
isted in that part of the world for thousands of years. They just prefer 
direct exchange between equals — in this case, because they consider it 
more manly. 29 

The most remarkable thing is that even in Adam Smith's examples 
of fish and nails and tobacco being used as money, the same sort of 
thing was happening. In the years following the appearance of The 
Wealth of Nations, scholars checked into most of those examples and 
discovered that in just about every case, the people involved were quite 
familiar with the use of money, and in fact, were using money — as a 
unit of account. 30 Take the example of dried cod, supposedly used as 
money in Newfoundland. As the British diplomat A. Mitchell-Innes 
pointed out almost a century ago, what Smith describes was really an 
illusion, created by a simple credit arrangement: 



In the early days of the Newfoundland fishing industry, there 
was no permanent European population; the fishers went there 
for the fishing season only, and those who were not fishers 
were traders who bought the dried fish and sold to the fishers 
their daily supplies. The latter sold their catch to the traders at 
the market price in pounds, shillings and pence, and obtained 
in return a credit on their books, with which they paid for their 
supplies. Balances due by the traders were paid for by drafts on 
England or France. 31 

It was quite the same in the Scottish village. It's not as if anyone 
actually walked into the local pub, plunked down a roofing nail, and 
asked for a pint of beer. Employers in Smith's day often lacked coin 
to pay their workers; wages could be delayed by a year or more; in 
the meantime, it was considered acceptable for employees to carry off 
either some of their own products or leftover work materials, lumber, 
fabric, cord, and so on. The nails were de facto interest on what their 
employers owed them. So they went to the pub, ran up a tab, and when 
occasion permitted, brought in a bag of nails to charge off against the 
debt. The law making tobacco legal tender in Virginia seems to have 
been an attempt by planters to oblige local merchants to accept their 
products as a credit around harvest time. In effect, the law forced all 
merchants in Virginia to become middlemen in the tobacco business, 
whether they liked it or not; just as all West Indian merchants were 
obliged to become sugar dealers, since that's what all their wealthier 
customers brought in to write off against their debt. 

The primary examples, then, were ones in which people were 
improvising credit systems, because actual money — gold and silver 
coinage — was in short supply. But the most shocking blow to the con- 
ventional version of economic history came with the translation, first of 
Egyptian hieroglyphics, and then of Mesopotamian cuneiform, which 
pushed back scholars' knowledge of written history almost three mil- 
lennia, from the time of Homer (circa 800 bc), where it had hovered in 
Smith's time, to roughly 3500 bc. What these texts revealed was that 
credit systems of exactly this sort actually preceded the invention of 
coinage by thousands of years. 

The Mesopotamian system is the best-documented, more so than 
that of Pharaonic Egypt (which appears similar), Shang China (about 
which we know little), or the Indus Valley civilization (about which 
we know nothing at all). As it happens, we know a great deal about 
Mesopotamia, since the vast majority of cuneiform documents were 
financial in nature. 



The Sumerian economy was dominated by vast temple and palace 
complexes. These were often staffed by thousands: priests and officials, 
craftspeople who worked in their industrial workshops, farmers and 
shepherds who worked their considerable estates. Even though ancient 
Sumer was usually divided into a large number of independent city- 
states, by the time the curtain goes up on Mesopotamian civilization 
around 3500, temple administrators already appear to have developed 
a single, uniform system of accountancy — one that is in some ways 
still with us, actually, because it's to the Sumerians that we owe such 
things as the dozen or the 24-hour day. 32 The basic monetary unit was 
the silver shekel. One shekel's weight in silver was established as the 
equivalent of one gur, or bushel of barley. A shekel was subdivided 
into 60 minas, corresponding to one portion of barley — on the prin- 
ciple that there were 30 days in a month, and Temple workers received 
two rations of barley every day. It's easy to see that "money" in this 
sense is in no way the product of commercial transactions. It was ac- 
tually created by bureaucrats in order to keep track of resources and 
move things back and forth between departments. 

Temple bureaucrats used the system to calculate debts (rents, fees, 
loans . . .) in silver. Silver was, effectively, money. And it did indeed 
circulate in the form of unworked chunks, "rude bars" as Smith had 
put it. 33 In this he was right. But it was almost the only part of his ac- 
count that was right. One reason was that silver did not circulate very 
much. Most of it just sat around in Temple and Palace treasuries, some 
of which remained, carefully guarded, in the same place for literally 
thousands of years. It would have been easy enough to standardize the 
ingots, stamp them, create some authoritative system to guarantee their 
purity. The technology existed. Yet no one saw any particular need to 
do so. One reason was that while debts were calculated in silver, they 
did not have to be paid in silver — in fact, they could be paid in more 
or less anything one had around. Peasants who owed money to the 
Temple or Palace, or to some Temple or Palace official, seem to have 
settled their debts mostly in barley, which is why fixing the ratio of sil- 
ver to barley was so important. But it was perfectly acceptable to show 
up with goats, or furniture, or lapis lazuli. Temples and Palaces were 
huge industrial operations — they could find a use for almost anything. 34 

In the marketplaces that cropped up in Mesopotamian cities, pric- 
es were also calculated in silver, and the prices of commodities that 
weren't entirely controlled by the Temples and Palaces would tend to 
fluctuate according to supply and demand. But even here, such evidence 
as we have suggests that most transactions were based on credit. Mer- 
chants (who sometimes worked for the Temples, sometimes operated 



independently) were among the few people who did, often, actually use 
silver in transactions; but even they mostly did much of their dealings 
on credit, and ordinary people buying beer from "ale women," or lo- 
cal innkeepers, once again, did so by running up a tab, to be settled at 
harvest time in barley or anything they might have had at hand. 35 

At this point, just about every aspect of the conventional story of 
the origins of money lay in rubble. Rarely has an historical theory been 
so absolutely and systematically refuted. By the early decades of the 
twentieth century, all the pieces were in place to completely rewrite 
the history of money. The groundwork was laid by Mitchell-Innes — 
the same one I've already cited on the matter of the cod — in two essays 
that appeared in New York's Banking Law Journal in 1913 and 1914. 
In these, Mitchell-Innes matter-of-factly laid out the false assumptions 
on which existing economic history was based and suggested that what 
was really needed was a history of debt: 

One of the popular fallacies in connection with commerce is 
that in modern days a money-saving device has been intro- 
duced called credit and that, before this device was known, 
all, purchases were paid for in cash, in other words in coins. A 
careful investigation shows that the precise reverse is true. In 
olden days coins played a far smaller part in commerce than 
they do to-day. Indeed so small was the quantity of coins, that 
they did not even suffice for the needs of the [Medieval Eng- 
lish] Royal household and estates which regularly used tokens 
of various kinds for the purpose of making small payments. So 
unimportant indeed was the coinage that sometimes Kings did 
not hesitate to call it all in for re-minting and re-issue and still 
commerce went on just the same. 36 

In fact, our standard account of monetary history is precisely 
backwards. We did not begin with barter, discover money, and then 
eventually develop credit systems. It happened precisely the other way 
around. What we now call virtual money came first. Coins came much 
later, and their use spread only unevenly, never completely replacing 
credit systems. Barter, in turn, appears to be largely a kind of acciden- 
tal byproduct of the use of coinage or paper money: historically, it has 
mainly been what people who are used to cash transactions do when 
for one reason or another they have no access to currency. 

The curious thing is that it never happened. This new history was 
never written. It's not that any economist has ever refuted Mitchell-Innes. 
They just ignored him. Textbooks did not change their story — even if 



all the evidence made clear that the story was simply wrong. People 
still write histories of money that are actually histories of coinage, on 
the assumption that in the past, these were necessarily the same thing; 
periods when coinage largely vanished are still described as times when 
the economy "reverted to barter," as if the meaning of this phrase is 
self-evident, even though no one actually knows what it means. As a 
result we have next-to-no idea how, say, the inhabitant of a Dutch 
town in 950 ad actually went about acquiring cheese or spoons or hir- 
ing musicians to play at his daughter's wedding — let alone how any of 
this was likely to be arranged in Pemba or Samarkand.' 7 

Chapter Three 


In being born every being is born as 
debt owed to the gods, the saints, the 
Fathers and to men. If one makes a sac- 
rifice, it is because of a debt owing to 
the gods from birth . . . If one recites a 
sacred text, it is because of a debt owing 
to the saints . . . If one wishes for off- 
spring, it is because of a debt due to the 
fathers from birth . . . And if one gives 
hospitality, it is because it is a debt ow- 
ing to men. 

— Satapatha Brahmana 1.7.12, 1-6 

Let us drive away the evil effects of bad 
dreams, just as we pay off debts. 

— Rig Veda 8.47.17 

THE REASON THAT economics textbooks now begin with imaginary 
villages is because it has been impossible to talk about real ones. Even 
some economists have been forced to admit that Smith's Land of Barter 
doesn't really exist. 1 

The question is why the myth has been perpetuated, anyway. 
Economists have long since jettisoned other elements of The Wealth of 
Nations — for instance, Smith's labor theory of value and disapproval 
of joint-stock corporations. Why not simply write off the myth of bar- 
ter as a quaint Enlightenment parable, and instead attempt to under- 
stand primordial credit arrangements — or anyway, something more in 
keeping with the historical evidence? 

The answer seems to be that the Myth of Barter cannot go away, 
because it is central to the entire discourse of economics. 



Recall here what Smith was trying to do when he wrote The 
Wealth of Nations. Above all, the book was an attempt to establish 
the newfound discipline of economics as a science. This meant that not 
only did economics have its own peculiar domain of study — what we 
now call "the economy," though the idea that there even was some- 
thing called an "economy" was very new in Smith's day — but that 
this economy operated according to laws of much the same sort as 
Sir Isaac Newton had so recently identified as governing the physical 
world. Newton had represented God as a cosmic watchmaker who had 
created the physical machinery of the universe in such a way that it 
would operate for the ultimate benefit of humans, and then let it run 
on its own. Smith was trying to make a similar, Newtonian argument. 2 
God — or Divine Providence, as he put it — had arranged matters in 
such a way that our pursuit of self-interest would nonetheless, given an 
unfettered market, be guided "as if by an invisible hand" to promote 
the general welfare. Smith's famous invisible hand was, as he says in 
his Theory of Moral Sentiments, the agent of Divine Providence. It was 
literally the hand of God.' 

Once economics had been established as a discipline, the theological 
arguments no longer seemed necessary or important. People continue 
to argue about whether an unfettered free market really will produce 
the results that Smith said it would; but no one questions whether "the 
market" naturally exists. The underlying assumptions that derive from 
this came to be seen as common sense — so much so that, as I've noted, 
we simply assume that when valuable objects do change hands, it will 
normally be because two individuals have both decided they would 
gain a material advantage by swapping them. One interesting corollary 
is that, as a result, economists have come to see the very question of 
the presence or absence of money as not especially important, since 
money is just a commodity, chosen to facilitate exchange, and which 
we use to measure the value of other commodities. Otherwise, it has no 
special qualities. Still, in 1958, Paul Samuelson, one of the leading lights 
of the neoclassical school that still predominates in modern economic 
thought, could express disdain for what he called "the social contriv- 
ance of money." "Even in the most advanced industrial economies," he 
insisted, "if we strip exchange down to its barest essentials and peel off 
the obscuring layer of money, we find that trade between individuals 
and nations largely boils down to barter." 4 Others spoke of a "veil of 
money" obscuring the nature of the "real economy" in which people 
produced real goods and services and swapped them back and forth. 5 

Call this the final apotheosis of economics as common sense. 
Money is unimportant. Economies — "real economies" — are really vast 



barter systems. The problem is that history shows that without money, 
such vast barter systems do not occur. Even when economies "revert to 
barter," as Europe was said to do in the Middle Ages, they don't actu- 
ally abandon the use of money. They just abandon the use of cash. In 
the Middle Ages, for instance, everyone continued to assess the value 
of tools and livestock in the old Roman currency, even if the coins 
themselves had ceased to circulate. 6 

It's money that had made it possible for us to imagine ourselves in 
the way economists encourage us to do: as a collection of individuals 
and nations whose main business is swapping things. It's also clear that 
the mere existence of money, in itself, is not enough to allow us see the 
world this way. If it were, the discipline of economics would have been 
created in ancient Sumer, or anyway, far earlier than 1776, when Adam 
Smith's The Wealth of Nations appeared. 

The missing element is in fact exactly the thing Smith was at- 
tempting to downplay: the role of government policy. In England, in 
Smith's day, it became possible to see the market, the world of butch- 
ers, ironmongers, and haberdashers, as its own entirely independent 
sphere of human activity because the British government was actively 
engaged in fostering it. This required laws and police, but also, specific 
monetary policies, which liberals like Smith were (successfully) advo- 
cating. 7 It required pegging the value of the currency to silver, but at 
the same time greatly increasing the money supply, and particularly 
the amount of small change in circulation. This not only required 
huge amounts of tin and copper, but also the careful regulation of the 
banks that were, at that time, the only source of paper money. The 
century before The Wealth of Nations had seen at least two attempts 
to create state-supported central banks, in France and Sweden, that 
had proven to be spectacular failures. In each case, the would-be cen- 
tral bank issued notes based largely on speculation that collapsed the 
moment investors lost faith. Smith supported the use of paper money, 
but like Locke before him, he also believed that the relative success 
of the Bank of England and Bank of Scotland had been due to their 
policy of pegging paper money firmly to precious metals. This became 
the mainstream economic view, so much so that alternative theories of 
money as credit — the one that Mitchell-Innes advocated — were quickly 
relegated to the margins, their proponents written off as cranks, and 
the very sort of thinking that led to bad banks and speculative bubbles 
in the first place. 

It might be helpful, then, to consider what these alternative theo- 
ries actually were. 



State and Credit Theories of Money 

Mitchell-Innes was an exponent of what came to be known as the 
Credit Theory of money, a position that over the course of the nine- 
teenth century had its most avid proponents not in Mitchell-Innes's 
native Britain but in the two up-and-coming rival powers of the day, 
the United States and Germany. Credit Theorists insisted that money 
is not a commodity but an accounting tool. In other words, it is not a 
"thing" at all. You can no more touch a dollar or a deutschmark than 
you can touch an hour or a cubic centimeter. Units of currency are 
merely abstract units of measurement, and as the credit theorists cor- 
rectly noted, historically, such abstract systems of accounting emerged 
long before the use of any particular token of exchange. 8 

The obvious next question is: If money is a just a yardstick, what 
then does it measure? The answer was simple: debt. A coin is, effec- 
tively, an IOU. Whereas conventional wisdom holds that a banknote is, 
or should be, a promise to pay a certain amount of "real money" (gold, 
silver, whatever that might be taken to mean), Credit Theorists argued 
that a banknote is simply the promise to pay something of the same 
value as an ounce of gold. But that's all that money ever is. There's 
no fundamental difference in this respect between a silver dollar, a 
Susan B. Anthony dollar coin made of a copper-nickel alloy designed 
to look vaguely like gold, a green piece of paper with a picture of 
George Washington on it, or a digital blip on some bank's computer. 
Conceptually, the idea that a piece of gold is really just an IOU is 
always rather difficult to wrap one's head around, but something like 
this must be true, because even when gold and silver coins were in use, 
they almost never circulated at their bullion value. 

How could credit money come about? Let us return to the econom- 
ics professors' imaginary town. Say, for example, that Joshua were 
to give his shoes to Henry, and, rather than Henry owing him a fa- 
vor, Henry promises him something of equivalent value. 9 Henry gives 
Joshua an IOU. Joshua could wait for Henry to have something use- 
ful, and then redeem it. In that case Henry would rip up the IOU and 
the story would be over. But say Joshua were to pass the IOU on to a 
third party — Sheila — to whom he owes something else. He could tick 
it off against his debt to a fourth party, Lola — now Henry will owe 
that amount to her. Hence is money born. Because there's no logical 
end to it. Say Sheila now wishes to acquire a pair of shoes from Edith; 
she can just hand Edith the IOU, and assure her that Henry is good 
for it. In principle, there's no reason that the IOU could not continue 



circulating around town for years — provided people continue to have 
faith in Henry. In fact, if it goes on long enough, people might forget 
about the issuer entirely. Things like this do happen. The anthropolo- 
gist Keith Hart once told me a story about his brother, who in the '50s 
was a British soldier stationed in Hong Kong. Soldiers used to pay their 
bar tabs by writing checks on accounts back in England. Local mer- 
chants would often simply endorse them over to each other and pass 
them around as currency: once, he saw one of his own checks, written 
six months before, on the counter of a local vendor covered with about 
forty different tiny inscriptions in Chinese. 

What credit theorists like Mitchell-Innes were arguing is that even 
if Henry gave Joshua a gold coin instead of a piece of paper, the situ- 
ation would be essentially the same. A gold coin is a promise to pay 
something else of equivalent value to a gold coin. After all, a gold coin 
is not actually useful in itself. One only accepts it because one assumes 
other people will. 

In this sense, the value of a unit of currency is not the measure 
of the value of an object, but the measure of one's trust in other 
human beings. 

This element of trust of course makes everything more compli- 
cated. Early banknotes circulated via a process almost exactly like 
what I've just described, except that, like the Chinese merchants, each 
recipient added his or her signature to guarantee the debt's legitimacy. 
But generally, the difficulty in the Chartalist position — this is what 
it came to be called, from the Latin charta, or token — is to establish 
why people would continue to trust a piece of paper. After all, why 
couldn't anyone just sign Henry's name on an IOU? True, this sort 
of debt-token system might work within a small village where every- 
one knew one another, or even among a more dispersed community 
like sixteenth-century Italian or twentieth-century Chinese merchants, 
where everyone at least had ways of keeping track of everybody else. 
But systems like these cannot create a full-blown currency system, and 
there's no evidence that they ever have. Providing a sufficient number 
of IOUs to allow everyone even in a medium-sized city to be able to 
carry out a significant portion of their daily transactions in such cur- 
rency would require millions of tokens. 10 To be able to guarantee all of 
them, Henry would have to be almost unimaginably rich. 

All this would be much less of a problem, however, if Henry were, 
say, Henry II, King of England, Duke of Normandy, Lord of Ireland, 
and Count of Anjou. 

The real impetus for the Chartalist position, in fact, came out of 
what came to be known as the "German Historical School," whose 



most famous exponent was the historian G.F. Knapp, whose State 
Theory of Money first appeared in 1905. 11 If money is simply a unit 
of measure, it makes sense that emperors and kings should concern 
themselves with such matters. Emperors and kings are almost always 
concerned to established uniform systems of weights and measures 
throughout their kingdoms. It is also true, as Knapp observed, that 
once established, such systems tend to remain remarkably stable over 
time. During the reign of the actual Henry II (1154-1189), just about 
everyone in Western Europe was still keeping their accounts using the 
monetary system established by Charlemagne some 350 years earlier — 
that is, using pounds, shillings, and pence — despite the fact that some 
of these coins had never existed (Charlemagne never actually struck 
a silver pound), none of Charlemagne's actual shillings and pence re- 
mained in circulation, and those coins that did circulate tended to 
vary enormously in size, weight, purity, and value. 12 According to the 
Chartalists, this doesn't really matter. What matters is that there is a 
uniform system for measuring credits and debts, and that this system 
remains stable over time. The case of Charlemagne's currency is par- 
ticularly dramatic because his actual empire dissolved quite quickly, 
but the monetary system he created continued to be used, for keeping 
accounts, within his former territories for more than 800 years. It was 
referred to, in the sixteenth century, quite explicitly as "imaginary 
money," and derniers and livres were only completely abandoned, as 
units of account, around the time of the French Revolution. 13 

According to Knapp, whether or not the actual, physical money 
stuff in circulation corresponds to this "imaginary money" is not par- 
ticularly important. It makes no real difference whether it's pure sil- 
ver, debased silver, leather tokens, or dried cod — provided the state 
is willing to accept it in payment of taxes. Because whatever the state 
was willing to accept, for that reason, became currency. One of the 
most important forms of currency in England in Henry's time were 
notched "tally sticks" used to record debts. Tally sticks were quite 
explicitly IOUs: both parties to a transaction would take a hazelwood 
twig, notch it to indicate the amount owed, and then split it in half. 
The creditor would keep one half, called "the stock" (hence the origin 
of the term "stock holder") and the debtor kept the other, called "the 
stub" (hence the origin of the term "ticket stub.") Tax assessors used 
such twigs to calculate amounts owed by local sheriffs. Often, though, 
rather than wait for the taxes to come due, Henry's exchequer would 
often sell the tallies at a discount, and they would circulate, as tokens 
of debt owed to the government, to anyone willing to trade for them. 14 



Modern Banknotes actually work on a similar principle, except in 
reverse. 15 Recall here the little parable about Henry's IOU. The reader 
might have noticed one puzzling aspect of the equation: the IOU can 
operate as money only as long as Henry never pays his debt. In fact this 
is precisely the logic on which the Bank of England — the first successful 
modern central bank — was originally founded. In 1694, a consortium 
of English bankers made a loan of £1,200,000 to the king. In return 
they received a royal monopoly on the issuance of banknotes. What 
this meant in practice was they had the right to advance IOUs for a 
portion of the money the king now owed them to any inhabitant of the 
kingdom willing to borrow from them, or willing to deposit their own 
money in the bank — in effect, to circulate or "monetize" the newly 
created royal debt. This was a great deal for the bankers (they got 
to charge the king 8 percent annual interest for the original loan and 
simultaneously charge interest on the same money to the clients who 
borrowed it), but it only worked as long as the original loan remained 
outstanding. To this day, this loan has never been paid back. It cannot 
be. If it ever were, the entire monetary system of Great Britain would 
cease to exist. 16 

If nothing else, this approach helps solve one of the obvious mys- 
teries of the fiscal policy of so many early kingdoms: Why did they 
make subjects pay taxes at all? This is not a question we're used to 
asking. The answer seems self-evident. Governments demand taxes be- 
cause they wish to get their hands on people's money. But if Smith was 
right, and gold and silver became money through the natural workings 
of the market completely independently of governments, then wouldn't 
the obvious thing be to just grab control of the gold and silver mines? 
Then the king would have all the money he could possibly need. In 
fact, this is what ancient kings would normally do. If there were gold 
and silver mines in their territory, they would usually take control of 
them. So what exactly was the point of extracting the gold, stamping 
one's picture on it, causing it to circulate among one's subjects — and 
then demanding that those same subjects give it back again? 

This does seem a bit of a puzzle. But if money and markets do not 
emerge spontaneously, it actually makes perfect sense. Because this is 
the simplest and most efficient way to bring markets into being. Let 
us take a hypothetical example. Say a king wishes to support a stand- 
ing army of fifty thousand men. Under ancient or medieval conditions, 
feeding such a force was an enormous problem — unless they were on 
the march, one would need to employ almost as many men and ani- 
mals just to locate, acquire, and transport the necessary provisions. 17 
On the other hand, if one simply hands out coins to the soldiers and 



then demands that every family in the kingdom was obliged to pay 
one of those coins back to you, one would, in one blow, turn one's 
entire national economy into a vast machine for the provisioning of 
soldiers, since now every family, in order to get their hands on the 
coins, must find some way to contribute to the general effort to provide 
soldiers with things they want. Markets are brought into existence as a 
side effect. 

This is a bit of a cartoon version, but it is very clear that markets 
did spring up around ancient armies; one need only take a glance at 
Kautilya's Arthasasatra, the Sassanian "circle of sovereignty," or the 
Chinese "Discourses on Salt and Iron" to discover that most ancient 
rulers spent a great deal of their time thinking about the relation be- 
tween mines, soldiers, taxes, and food. Most concluded that the cre- 
ation of markets of this sort was not just convenient for feeding sol- 
diers, but useful in all sorts of ways, since it meant officials no longer 
had to requisition everything they needed directly from the populace, 
or figure out a way to produce it on royal estates or royal workshops. 
In other words, despite the dogged liberal assumption — again, com- 
ing from Smith's legacy — that the existence of states and markets are 
somehow opposed, the historical record implies that exactly the op- 
posite is the case. Stateless societies tend also to be without markets. 

As one might imagine, state theories of money have always been 
anathema to mainstream economists working in the tradition of Adam 
Smith. In fact, Chartalism has tended to be seen as a populist underside 
of economic theory, favored mainly by cranks. 18 The curious thing is 
that the mainstream economists often ended up actually working for 
governments and advising such governments to pursue policies much 
like those the Chartalists described — that is, tax policies designed to 
create markets where they had not existed before — despite the fact 
that they were in theory committed to Smith's argument that markets 
develop spontaneously of their own accord. 

This was particularly true in the colonial world. To return to Mad- 
agascar for a moment: I have already mentioned that one of the first 
things that the French general Gallieni, conqueror of Madagascar, did 
when the conquest of the island was complete in 1901 was to impose 
a head tax. Not only was this tax quite high, it was also only payable 
in newly issued Malagasy francs. In other words, Gallieni did indeed 
print money and then demand that everyone in the country give some 
of that money back to him. 

Most striking of all, though, was language he used to describe this 
tax. It was referred to as the "impot moralisateur," the "educational" 
or "moralizing tax." In other words, it was designed — to adopt the 



language of the day — to teach the natives the value of work. Since 
the "educational tax" came due shortly after harvest time, the easiest 
way for farmers to pay it was to sell a portion of their rice crop to the 
Chinese or Indian merchants who soon installed themselves in small 
towns across the country. However, harvest was when the market 
price of rice was, for obvious reasons, at its lowest; if one sold too 
much of one's crop, that meant one would not have enough left to 
feed one's family for the entire year, and thus be forced to buy one's 
own rice back, on credit, from those same merchants later in the year 
when prices were much higher. As a result, farmers quickly fell hope- 
lessly into debt (the merchants doubling as loan sharks). The easiest 
ways to pay back the debt was either to find some kind of cash crop 
to sell — to start growing coffee, or pineapples — or else to send one's 
children off to work for wages in the city, or on one of the plantations 
that French colonists were establishing across the island. The whole 
project might seem no more than a cynical scheme to squeeze cheap 
labor out of the peasantry, and it was that, but it was also something 
more. The colonial government was were also quite explicit (at least 
in their own internal policy documents), about the need to make sure 
that peasants had at least some money of their own left over, and to 
ensure that they became accustomed to the minor luxuries — parasols, 
lipstick, cookies — available at the Chinese shops. It was crucial that 
they develop new tastes, habits, and expectations; that they lay the 
foundations of a consumer demand that would endure long after the 
conquerors had left, and keep Madagascar forever tied to France. 

Most people are not stupid, and most Malagasy understood ex- 
actly what their conquerors were trying to do to them. Some were 
determined to resist. More than sixty years after the invasion, a French 
anthropologist, Gerard Althabe, was able to observe villages on the 
east coast of the island whose inhabitants would dutifully show up at 
the coffee plantations to earn the money for their poll tax, and then, 
having paid it, studiously ignore the wares for sale at the local shops 
and instead turn over any remaining money to lineage elders, who 
would then use it to buy cattle for sacrifice to their ancestors. 19 Many 
were quite open in saying that they saw themselves as resisting a trap. 

Still, such defiance rarely lasts forever. Markets did gradually take 
shape, even in those parts of the island where none had previously 
existed. With them came the inevitable network of little shops. And by 
the time I got there, in 1990, a generation after the poll tax had finally 
been abolished by a revolutionary government, the logic of the market 
had become so intuitively accepted that even spirit mediums were recit- 
ing passages that might as well have come from Adam Smith. 



Such examples could be multiplied endlessly. Something like this 
occurred in just about every part of the world conquered by European 
arms where markets were not already in place. Rather than discovering 
barter, they ended up using the very techniques that mainstream eco- 
nomics rejected to bring something like the market into being. 

In Search of a Myth 

Anthropologists have been complaining about the Myth of Barter for 
almost a century. Occasionally, economists point out with slight ex- 
asperation that there's a fairly simple reason why they're still telling 
the same story despite all the evidence against it: anthropologists have 
never come up with a better one. 20 This is an understandable objection, 
but there's a simple answer to it. The reasons why anthropologists 
haven't been able to come up with a simple, compelling story for the 
origins of money is because there's no reason to believe there could be 
one. Money was no more ever "invented" than music or mathematics 
or jewelry. What we call "money" isn't a "thing" at all, it's a way of 
comparing things mathematically, as proportions: of saying one of X is 
equivalent to six of Y. As such it is probably as old as human thought. 
The moment we try to get any more specific, we discover that there 
are any number of different habits and practices that have converged 
in the stuff we now call "money," and this is precisely the reason why 
economists, historians, and the rest have found it so difficult to come 
up with a single definition. 

Credit Theorists have long been hobbled by the lack of an equally 
compelling narrative. This is not to say that all sides in the currency 
debates that ranged between 1850 and 1950 were not in the habit of 
deploying mythological weaponry. This was true particularly, perhaps, 
in the United States. In 1894, the Greenbackers, who pushed for de- 
taching the dollar from gold entirely to allow the government to spend 
freely on job-creation campaigns, invented the idea of the March on 
Washington — an idea that was to have endless resonance in U.S. his- 
tory. L. Frank Baum's book The Wonderful Wizard of Oz, which ap- 
peared in 1900, is widely recognized to be a parable for the Populist 
campaign of William Jennings Bryan, who twice ran for president on 
the Free Silver platform — vowing to replace the gold standard with a 
bimetallic system that would allow the free creation of silver money 
alongside gold. 21 As with the Greenbackers, one of the main constitu- 
encies for the movement was debtors: particularly, Midwestern farm 



families such as Dorothy's, who had been facing a massive wave of 
foreclosures during the severe recession of the 1890s. According to the 
Populist reading, the Wicked Witches of the East and West represent 
the East and West Coast bankers (promoters of and benefactors from 
the tight money supply), the Scarecrow represented the farmers (who 
didn't have the brains to avoid the debt trap), the Tin Woodsman was 
the industrial proletariat (who didn't have the heart to act in solidarity 
with the farmers), the Cowardly Lion represented the political class 
(who didn't have the courage to intervene). The yellow brick road, 
silver slippers, emerald city, and hapless Wizard presumably speak for 
themselves. 22 "Oz" is of course the standard abbreviation for "ounce." 23 
As an attempt to create a new myth, Baum's story was remarkably ef- 
fective. As political propaganda, less so. William Jennings Bryan failed 
in three attempts to win the presidency, the silver standard was never 
adopted, and few nowadays even remember what The Wonderful Wiz- 
ard of Oz was originally supposed to be about. 24 

For state-money theorists in particular, this has been a problem. 
Stories about rulers using taxes to create markets in conquered territo- 
ries, or to pay for soldiers or other state functions, are not particularly 
inspiring. German ideas of money as the embodiment of national will 
did not travel very well. 

Every time there was a major economic meltdown, however, con- 
ventional laissez-faire economics took another hit. The Bryan cam- 
paigns were born as a reaction to the Panic of 1893. By the time of the 
Great Depression of the 1930s, the very notion that the market could 
regulate itself, so long as the government ensured that money was safe- 
ly pegged to precious metals, was completely discredited. From roughly 
1933 to 1979, every major capitalist government reversed course and 
adopted some version of Keynesianism. Keynesian orthodoxy started 
from the assumption that capitalist markets would not really work 
unless capitalist governments were willing effectively to play nanny: 
most famously, by engaging in massive deficit "pump-priming" during 
downturns. While in the '80s, Margaret Thatcher in Britain and Ron- 
ald Reagan in the United States made a great show of rejecting all of 
this, it's unclear how much they really did. 25 And in any case, they were 
operating in the wake of an even greater blow to previous monetary 
orthodoxy: Richard Nixon's decision in 1971 to unpeg the dollar from 
precious metals entirely, eliminate the international gold standard, and 
introduce the system of floating currency regimes that has dominated 
the world economy ever since. This meant in effect that all national 
currencies were henceforth, as neoclassical economists like to put it, 
"fiat money" backed only by the public trust. 



Now, John Maynard Keynes himself was much more open to what 
he liked to call the "alternative tradition" of credit and state theories 
than any economist of that stature (and Keynes is still arguably the sin- 
gle most important economic thinker of the twentieth century) before 
or since. At certain points he immersed himself in it: he spent several 
years in the 1920s studying Mesopotamian cuneiform banking records 
to try to ascertain the origins of money — his "Babylonian madness," 
as he would later call it. 26 His conclusion, which he set forth at the 
very beginning of his Treatise on Money, his most famous work, was 
more or less the only conclusion one could come to if one started not 
from first principles, but from a careful examination of the historical 
record: that the lunatic fringe was, essentially, right. Whatever its earli- 
est origins, for the last four thousand years, money has been effectively 
a creature of the state. Individuals, he observed, make contracts with 
one another. They take out debts, and they promise payment. 

The State, therefore, comes in first of all as the authority of law 
which enforces the payment of the thing which corresponds to 
the name or description in the contract. But it comes doubly 
when, in addition, it claims the right to determine and declare 
what thing corresponds to the name, and to vary its declara- 
tion from time to time — when, that is to say it claims the right 
to re-edit the dictionary. This right is claimed by all modern 
States and has been so claimed for some four thousand years 
at least. It is when this stage in the evolution of Money has 
been reached that Knapp's Chartalism — the doctrine that mon- 
ey is peculiarly a creation of the State — is fully realized . . . 
To-day all civilized money is, beyond the possibility of dispute, 
chartalist. 27 

This does not mean that the state necessarily creates money. Mon- 
ey is credit, it can be brought into being by private contractual agree- 
ments (loans, for instance). The state merely enforces the agreement 
and dictates the legal terms. Hence Keynes' next dramatic assertion: 
that banks create money, and that there is no intrinsic limit to their 
ability to do so: since however much they lend, the borrower will 
have no choice but to put the money back into some bank again, and 
thus, from the perspective of the banking system as a whole, the total 
number of debits and credits will always cancel out. 28 The implications 
were radical, but Keynes himself was not. In the end, he was always 
careful to frame the problem in a way that could be reintegrated into 
the mainstream economics of his day. 



Neither was Keynes much of a mythmaker. Insofar as the alterna- 
tive tradition has come up with an answer to the Myth of Barter, it 
was not from Keynes' own efforts (Keynes ultimately decided that the 
origins of money were not particularly important) but in the work of 
some contemporary neo-Keynesians, who were not afraid to follow 
some of his more radical suggestions as far as they would go. 

The real weak link in state-credit theories of money was always the 
element of taxes. It is one thing to explain why early states demanded 
taxes (in order to create markets.) It's another to ask "by what right?" 
Assuming that early rulers were not simply thugs, and that taxes were 
not simply extortion — and no Credit Theorist, to my knowledge, took 
such a cynical view even of early government — one must ask how they 
justified this sort of thing. 

Nowadays, we all think we know the answer to this question. We 
pay our taxes so that the government can provide us with services. This 
starts with security services — military protection being, often, about 
the only service some early states were really able to provide. By now, 
of course, the government provides all sorts of things. All of this is 
said to go back to some sort of original "social contract" that everyone 
somehow agreed on, though no one really knows exactly when or by 
whom, or why we should be bound by the decisions of distant ances- 
tors on this one matter when we don't feel particularly bound by the 
decisions of our distant ancestors on anything else. 29 All of this makes 
sense if you assume that markets come before governments, but the 
whole argument totters quickly once you realize that they don't. 

There is an alternative explanation, one created to be in keeping 
with the state-credit theory approach. It's referred to as "primordial 
debt theory" and it has been developed largely in France, by a team of 
researchers — not only economists but anthropologists, historians, and 
classicists — originally assembled around the figures of Michel Aglietta 
and Andre Orleans,' and more recently, Bruno Theret, and it has since 
been taken up by neo-Keynesians in the United States and the United 
Kingdom as well. 31 

It's a position that has emerged quite recently, and at first, largely 
amidst debates about the nature of the euro. The creation of a common 
European currency sparked not only all sorts of intellectual debates 
(does a common currency necessarily imply the creation of a common 
European state? Or of a common European economy or society? Are 
these ultimately the same thing?) but dramatic political ones as well. 
The creation of the euro zone was spearheaded above all by Germany, 
whose central banks still see their main goal as combating inflation. 
What's more, tight money policies and the need to balance budgets 



having been used as the main weapon to chip away welfare-state poli- 
cies in Europe, it has necessarily become the stake of political struggles 
between bankers and pensioners, creditors and debtors, just as heated 
as those of 1890s America. 

The core argument is that any attempt to separate monetary policy 
from social policy is ultimately wrong. Primordial-debt theorists insist 
that these have always been the same thing. Governments use taxes to 
create money, and they are able to do so because they have become the 
guardians of the debt that all citizens have to one another. This debt is 
the essence of society itself. It exists long before money and markets, 
and money and markets themselves are simply ways of chopping pieces 
of it up. 

At first, the argument goes, this sense of debt was expressed not 
through the state, but through religion. To make the argument, Aglietta 
and Orleans fixed on certain works of early Sanskrit religious literature: 
the hymns, prayers, and poetry collected in the Vedas and the Brahma- 
nas, priestly commentaries composed over the centuries that followed, 
texts that are now considered the foundations of Hindu thought. It's 
not as odd a choice as it might seem. These texts constitute the earliest 
known historical reflections on the nature of debt. 

Actually, even the very earliest Vedic poems, composed sometime 
between 1500 and 1200 bc, evince a constant concern with debt — which 
is treated as synonymous with guilt and sin. 32 There are numerous 
prayers pleading with the gods to liberate the worshipper from the 
shackles or bonds of debt. Sometimes these seem to refer to debt in the 
literal sense — Rig Veda 10.34, f° r instance, has a long description of 
the sad plight of gamblers who "wander homeless, in constant fear, in 
debt, and seeking money." Elsewhere it's clearly metaphorical. 

In these hymns, Yama, the god of death, figures prominently. To 
be in debt was to have a weight placed on you by Death. To be under 
any sort of unfulfilled obligation, any unkept promise, to gods or to 
men, was to live in the shadow of Death. Often, even in the very early 
texts, debt seems to stand in for a broader sense of inner suffering, 
from which one begs the gods — particularly Agni, who represents the 
sacrificial fire — for release. It was only with the Brahmanas that com- 
mentators started trying to weave all this together into a more com- 
prehensive philosophy. The conclusion: that human existence is itself 
a form of debt. 

A man, being born, is a debt; by his own self he is born to 
Death, and only when he sacrifices does he redeem himself 
from Death. 33 



Sacrifice (and these early commentators were themselves sacrificial 
priests) is thus called "tribute paid to Death." Or such was the manner 
of speaking. In reality, as the priests knew better than anyone, sacrifice 
was directed to all the gods, not just Death — Death was just the inter- 
mediary. Framing things this way, though, did immediately raise the 
one problem that always comes up, whenever anyone conceives human 
life through such an idiom. If our lives are on loan, who would actually 
wish to repay such a debt? To live in debt is to be guilty, incomplete. 
But completion can only mean annihilation. In this way, the "tribute" 
of sacrifice could be seen as a kind of interest payment, with the life 
of the animal substituting temporarily for what's really owed, which is 
ourselves — a mere postponement of the inevitable. 34 

Different commentators proposed different ways out of the dilem- 
ma. Some ambitious Brahmins began telling their clients that sacrificial 
ritual, if done correctly, promised a way to break out of the human 
condition entirely and achieve eternity (since, in the face of eternity, all 
debts become meaningless.) 35 Another way was to broaden the notion 
of debt, so that all social responsibilities become debts of one sort or 
another. Thus two famous passages in the Brahmanas insist that we 
are born as a debt not just to the gods, to be repaid in sacrifice, but 
also to the Sages who created the Vedic learning to begin with, which 
we must repay through study; to our ancestors ("the Fathers"), who 
we must repay by having children; and finally, "to men" — apparently 
meaning humanity as a whole, to be repaid by offering hospitality to 
strangers. 36 Anyone, then, who lives a proper life is constantly paying 
back existential debts of one sort or another; but at the same time, as 
the notion of debt slides back into a simple sense of social obligation, 
it becomes something far less terrifying than the sense that one's very 
existence is a loan taken against Death. 37 Not least because social ob- 
ligations always cut both ways. Especially since, once one has oneself 
fathered children, one is just as much a debtor as a creditor. 

What primordial-debt theorists have done is to propose that the 
ideas encoded in these Vedic texts are not peculiar to a certain intel- 
lectual tradition of early Iron Age ritual specialists in the Ganges val- 
ley, but that they are essential to the very nature and history of human 
thought. Consider for example this statement, from an essay by French 
economist Bruno Theret with the uninspiring title "The Socio-Cultural 
Dimensions of the Currency: Implications for the Transition to the 
Euro," published in the Journal of Consumer Policy in 1999: 

At the origin of money we have a "relation of representa- 
tion" of death as an invisible world, before and beyond life — a 



representation that is the product of the symbolic function 
proper to the human species and which envisages birth as an 
original debt incurred by all men, a debt owing to the cosmic 
powers from which humanity emerged. 

Payment of this debt, which can however never be settled 
on earth — because its full reimbursement is out of reach — takes 
the form of sacrifices which, by replenishing the credit of the 
living, make it possible to prolong life and even in certain cases 
to achieve eternity by joining the Gods. But this initial belief- 
claim is also associated with the emergence of sovereign powers 
whose legitimacy resides in their ability to represent the entire 
original cosmos. And it is these powers that invented money as 
a means of settling debts — a means whose abstraction makes 
it possible to resolve the sacrificial paradox by which put- 
ting to death becomes the permanent means of protecting life. 
Through this institution, belief is in turn transferred to a cur- 
rency stamped with the effigy of the sovereign — a money put in 
circulation but whose return is organized by this other institu- 
tion which is the tax/settlement of the life debt. So money also 
takes on the function of a means of payment. 38 

If nothing else, this provides a neat illustration of how different 
are standards of debate in Europe from those current in the Anglo- 
American world. One can't imagine an American economist of any 
stripe writing something like this. Still, the author is actually making a 
rather clever synthesis here. Human nature does not drive us to "truck 
and barter." Rather, it ensures that we are always creating symbols — 
such as money itself. This is how we come to see ourselves in a cosmos 
surrounded by invisible forces; as in debt to the universe. 

The ingenious move of course is to fold this back into the state 
theory of money — since by "sovereign powers" Theret actually means 
"the state." The first kings were sacred kings who were either gods in 
their own right or stood as privileged mediators between human beings 
and the ultimate forces that governed the cosmos. This sets us on a 
road to the gradual realization that our debt to the gods was always, 
really, a debt to the society that made us what we are. 

The "primordial debt," writes British sociologist Geoffrey Ingham, 
"is that owed by the living to the continuity and durability of the soci- 
ety that secures their individual existence." 39 In this sense it is not just 
criminals who owe a "debt to society" — we are all, in a certain sense, 
guilty, even criminals. 



For instance, Ingham notes that, while there is no actual proof that 
money emerged in this way, "there is considerable indirect etymologi- 
cal evidence": 

In all Indo-European languages, words for "debt" are synony- 
mous with those for "sin" or "guilt", illustrating the links be- 
tween religion, payment and the mediation of the sacred and 
profane realms by "money." For example, there is a connection 
between money (German Geld), indemnity or sacrifice (Old 
English Geild), tax (Gothic Gild) and, of course, guilt. 40 

Or, to take another curious connection: Why were cattle so often 
used as money? The German historian Bernard Laum long ago pointed 
out that in Homer, when people measure the value of a ship or suit of 
armor, they always measure it in oxen — even though when they actu- 
ally exchange things, they never pay for anything in oxen. It is hard to 
escape the conclusion that this was because an ox was what one of- 
fered the gods in sacrifice. Hence they represented absolute value. From 
Sumer to Classical Greece, silver and gold were dedicated as offerings 
in temples. Everywhere, money seems to have emerged from the thing 
most appropriate for giving to the gods. 41 

If the king has simply taken over guardianship of that primordial 
debt we all owe to society for having created us, this provides a very 
neat explanation for why the government feels it has the right to make 
us pay taxes. Taxes are just a measure of our debt to the society that 
made us. But this doesn't really explain how this kind of absolute life- 
debt can be converted into money, which is by definition a means of 
measuring and comparing the value of different things. This is just as 
much a problem for credit theorists as for neoclassical economists, even 
if the problem for them is somewhat differently framed. If you start 
from the barter theory of money, you have to resolve the problem of 
how and why you would come to select one commodity to measure just 
how much you want each of the other ones. If you start from a credit 
theory, you are left with the problem I described in the first chapter: 
how to turn a moral obligation into a specific sum of money, how the 
mere sense of owing someone else a favor can eventually turn into a 
system of accounting in which one is able to calculate exactly how 
many sheep or fish or chunks of silver it would take to repay the debt. 
Or in this case, how do we go from that absolute debt we owe to God 
to the very specific debts we owe our cousins, or the bartender? 

The answer provided by primordial-debt theorists is, again, inge- 
nious. If taxes represent our absolute debt to the society that created 



us, then the first step toward creating real money comes when we start 
calculating much more specific debts to society, systems of fines, fees, 
and penalties, or even debts we owe to specific individuals who we 
have wronged in some way, and thus to whom we stand in a relation 
of "sin" or "guilt." 

This is actually much less implausible than it might sound. One of 
the puzzling things about all the theories about the origins of money 
that we've been looking at so far is that they almost completely ig- 
nore the evidence of anthropology. Anthropologists do have a great 
deal of knowledge of how economies within stateless societies actually 
worked — how they still work in places where states and markets have 
been unable to completely break up existing ways of doing things. 
There are innumerable studies of, say, the use of cattle as money in 
eastern or southern Africa, of shell money in the Americas (wampum 
being the most famous example) or Papua New Guinea, bead money, 
feather money, the use of iron rings, cowries, spondylus shells, brass 
rods, or woodpecker scalps. 42 The reason that this literature tends to be 
ignored by economists is simple: "primitive currencies" of this sort is 
only rarely used to buy and sell things, and even when they are, never 
primarily to buy and sell everyday items such as chickens or eggs or 
shoes or potatoes. Rather than being employed to acquire things, they 
are mainly used to rearrange relations between people. Above all, to 
arrange marriages and to settle disputes, particularly those arising from 
murders or personal injury. 

There is every reason to believe that our own money started the 
same way — even the English word "to pay" is originally derived from 
a word for "to pacify, appease" — as in, to give someone something 
precious, for instance, to express just how badly you feel about having 
just killed his brother in a drunken brawl, and how much you would 
really like to avoid this becoming the basis for an ongoing blood-feud. 4 ' 

Debt theorists are especially concerned with this latter possibil- 
ity. This is partly because they tend to skip past the anthropological 
literature and look at early law codes — taking inspiration here, from 
the groundbreaking work of one of the twentieth century's greatest nu- 
mismatists, Philip Grierson, who in the '70s, first suggested that money 
might first have emerged from early legal practice. Grierson was an 
expert in the European Dark Ages, and he became fascinated by what 
have come to be known as the "Barbarian Law Codes," established by 
many Germanic peoples after the destruction of the Roman Empire in 
the 600s and 700s — Goths, Frisians, Franks, and so on — soon followed 
by similar codes published everywhere from Russia to Ireland. Cer- 
tainly they are fascinating documents. On the one hand, they make it 



abundantly clear just how wrong are conventional accounts of Europe 
around this time "reverting to barter." Almost all of the Germanic law 
codes use Roman money to make assessments; penalties for theft, for 
instance, are almost always followed by demands that the thief not 
only return the stolen property but pay any outstanding rent (or in the 
event of stolen money, interest) owing for the amount of time it has 
been in his possession. On the other hand, these were soon followed by 
law codes by people living in territories that had never been under Ro- 
man rule — in Ireland, Wales, Nordic countries, Russia — and these are 
if anything even more revealing. They could be remarkably creative, 
both in what could be used as a means of payment and on the precise 
breakdown of injuries and insults that required compensation: 

Compensation in the Welsh laws is reckoned primarily in cattle 
and in the Irish ones in cattle or bondmaids (cutnal), with 
considerable use of precious metals in both. In the Germanic 
codes it is mainly in precious metal ... In the Russian codes it 
was silver and furs, graduated from marten down to squirrel. 
Their detail is remarkable, not only in the personal injuries 
envisioned — specific compensations for the loss of an arm, a 
hand, a forefinger, a nail, for a blow on the head so that the 
brain is visible or bone projects — but in the coverage some of 
them gave to the possessions of the individual household. Title 
II of the Salic Law deals with the theft of pigs, Title III with 
cattle, Title IV with sheep, Title V with goats, Title VI with 
dogs, each time with an elaborate breakdown differentiating 
between animals of different age and sex. 44 

This does make a great deal of psychological sense. I've already 
remarked how difficult it is to imagine how a system of precise 
equivalences — one young healthy milk cow is equivalent to exactly 
thirty-six chickens — could arise from most forms of gift exchange. If 
Henry gives Joshua a pig and feels he has received an inadequate 
counter-gift, he might mock Joshua as a cheapskate, but he would have 
little occasion to come up with a mathematical formula for precisely 
how cheap he feels Joshua has been. On the other hand, if Joshua's 
pig just destroyed Henry's garden, and especially, if that led to a fight 
in which Henry lost a toe, and Henry's family is now hauling Joshua 
up in front of the village assembly — this is precisely the context where 
people are most likely to become petty and legalistic and express out- 
rage if they feel they have received one groat less than was their right- 
ful due. That means exact mathematical specificity: for instance, the 



capacity to measure the exact value of a two-year-old pregnant sow. 
What's more, the levying of penalties must have constantly required 
the calculation of equivalences. Say the fine is in marten pelts but the 
culprit's clan doesn't have any martens. How many squirrel skins will 
do? Or pieces of silver jewelry? Such problems must have come up all 
the time and led to at least a rough-and-ready set of rules of thumb 
over what sorts of valuable were equivalent to others. This would 
help explain why, for instance, medieval Welsh law codes can contain 
detailed breakdowns not only of the value of different ages and condi- 
tions of milk cow, but of the monetary value of every object likely to 
be found in an ordinary homestead, down to the cost of each piece of 
timber — despite the fact that there seems no reason to believe that most 
such items could even be purchased on the open market at the time. 45 

There is something very compelling in all this. For one thing, the prem- 
ise makes a great deal of intuitive sense. After all, we do owe every- 
thing we are to others. This is simply true. The language we speak and 
even think in, our habits and opinions, the kind of food we like to eat, 
the knowledge that makes our lights switch on and toilets flush, even 
the style in which we carry out our gestures of defiance and rebellion 
against social conventions — all of this, we learned from other people, 
most of them long dead. If we were to imagine what we owe them as 
a debt, it could only be infinite. The question is: Does it really make 
sense to think of this as a debt? After all, a debt is by definition some- 
thing that we could at least imagine paying back. It is strange enough 
to wish to be square with one's parents — it rather implies that one does 
not wish to think of them as parents any more. Would we really want 
to be square with all humanity? What would that even mean? And is 
this desire really a fundamental feature of all human thought? 

Another way to put this would be: Are primordial-debt theorists 
describing a myth, have they discovered a profound truth of the hu- 
man condition that has always existed in all societies, and is it simply 
spelled out particularly clearly in certain ancient texts from India — or 
are they inventing a myth of their own? 

Clearly it must be the latter. They are inventing a myth. 

The choice of the Vedic material is significant. The fact is, we 
know almost nothing about the people who composed these texts and 
little about the society that created them. 46 We don't even know if 



interest-bearing loans existed in Vedic India — which obviously has a 
bearing on whether priests really saw sacrifice as the payment of inter- 
est on a loan we owe to Death. 47 As a result, the material can serve as 
a kind of empty canvas, or a canvas covered with hieroglyphics in an 
unknown language, on which we can project almost anything we want 
to. If we look at other ancient civilizations in which we do know some- 
thing about the larger context, we find that no such notion of sacrifice 
as payment is in evidence. 48 If we look through the work of ancient 
theologians, we find that most were familiar with the idea that sacrifice 
was a way by which human beings could enter into commercial rela- 
tions with the gods, but that they felt it was patently ridiculous: If the 
gods already have everything they want, what exactly do humans have 
to bargain with? 49 We've seen in the last chapter how difficult it is to 
give gifts to kings. With gods (let alone God) the problem is magnified 
infinitely. Exchange implies equality. In dealing with cosmic forces, this 
was simply assumed to be impossible from the start. 

The notion that debts to gods were appropriated by the state, 
and thus became the bases for taxation systems, can't really stand 
up either. The problem here is that in the ancient world, free citizens 
didn't usually pay taxes. Generally speaking, tribute was levied only on 
conquered populations. This was already true in ancient Mesopotamia, 
where the inhabitants of independent cities did not usually have to pay 
direct taxes at all. Similarly, as Moses Finley put it, "Classical Greeks 
looked upon direct taxes as tyrannical and avoided them whenever pos- 
sible. 50 Athenian citizens did not pay direct taxes of any sort; though 
the city did sometimes distribute money to its citizens, a kind of reverse 
taxation — sometimes directly, as with the proceeds of the Laurium sil- 
ver mines, and sometimes indirectly, as through generous fees for jury 
duty or attending the assembly. Subject cities, however, did have to pay 
tribute. Even within the Persian Empire, Persians did not have to pay 
tribute to the Great King, but the inhabitants of conquered provinces 
did. 51 The same was true in Rome, where for a very long time, Roman 
citizens not only paid no taxes but had a right to a share of the tribute 
levied on others, in the form of the dole — the "bread" part of the fa- 
mous "bread and circuses." 52 

In other words, Benjamin Franklin was wrong when he said that 
in this world nothing is certain except death and taxes. This obviously 
makes the idea that the debt to one is just a variation on the other 
much harder to maintain. 

None of this, however, deals a mortal blow to the state theory 
of money. Even those states that did not demand taxes did levy fees, 
penalties, tariffs, and fines of one sort or another. But it is very hard 



to reconcile with any theory that claims states were first conceived as 
guardians of some sort of cosmic, primordial debt. 

It's curious that primordial-debt theorists never have much to say 
about Sumer or Babylonia, despite the fact that Mesopotamia is where 
the practice of loaning money at interest was first invented, probably 
two thousand years before the Vedas were composed — and that it was 
also the home of the world's first states. But if we look into Mesopo- 
tamian history, it becomes a little less surprising. Again, what we find 
there is in many ways the exact opposite of what such theorists would 
have predicted. 

The reader will recall here that Mesopotamian city-states were 
dominated by vast Temples: gigantic, complex industrial institutions 
often staffed by thousands — including everyone from shepherds and 
barge-pullers to spinners and weavers to dancing girls and clerical ad- 
ministrators. By at least 2700 BC, ambitious rulers had begun to imitate 
them by creating palace complexes organized on similar terms — with 
the exception that where the Temples centered on the sacred chambers 
of a god or goddess, represented by a sacred image who was fed and 
clothed and entertained by priestly servants as if he or she were a liv- 
ing person. Palaces centered on the chambers of an actual live king. 
Sumerian rulers rarely went so far as to declare themselves gods, but 
they often came very close. However, when they did interfere in the 
lives of their subjects in their capacity as cosmic rulers, they did not 
do it by imposing public debts, but rather by canceling private ones. 53 

We don't know precisely when and how interest-bearing loans 
originated, since they appear to predate writing. Most likely, Temple 
administrators invented the idea as a way of financing the caravan 
trade. This trade was crucial because while the river valley of ancient 
Mesopotamia was extraordinarily fertile and produced huge surpluses 
of grain and other foodstuffs, and supported enormous numbers of 
livestock, which in turn supported a vast wool and leather industry, it 
was almost completely lacking in anything else. Stone, wood, metal, 
even the silver used as money, all had to be imported. From quite early 
times, then, Temple administrators developed the habit of advancing 
goods to local merchants — some of them private, others themselves 
Temple functionaries — who would then go off and sell it overseas. 
Interest was just a way for the Temples to take their share of the re- 
sulting profits. 54 However, once established, the principle seems to have 
quickly spread. Before long, we find not only commercial loans, but 
also consumer loans — usury in the classical sense of the term. By C2400 
BC it already appears to have been common practice on the part of lo- 
cal officials, or wealthy merchants, to advance loans to peasants who 



were in financial trouble on collateral and begin to appropriate their 
possessions if they were unable to pay. It usually started with grain, 
sheep, goats, and furniture, then moved on to fields and houses, or, al- 
ternately or ultimately, family members. Servants, if any, went quickly, 
followed by children, wives, and in some extreme occasions, even the 
borrower himself. These would be reduced to debt-peons: not quite 
slaves, but very close to that, forced into perpetual service in the lend- 
er's household — or, sometimes, in the Temples or Palaces themselves. 
In theory, of course, any of them could be redeemed whenever the bor- 
rower repaid the money, but for obvious reasons, the more a peasant's 
resources were stripped away from him, the harder that became. 

The effects were such that they often threatened to rip society 
apart. If for any reason there was a bad harvest, large proportions of 
the peasantry would fall into debt peonage; families would be bro- 
ken up. Before long, lands lay abandoned as indebted farmers fled 
their homes for fear of repossession and joined semi-nomadic bands 
on the desert fringes of urban civilization. Faced with the potential 
for complete social breakdown, Sumerian and later Babylonian kings 
periodically announced general amnesties: "clean slates," as economic 
historian Michael Hudson refers to them. Such decrees would typically 
declare all outstanding consumer debt null and void (commercial debts 
were not affected), return all land to its original owners, and allow all 
debt-peons to return to their families. Before long, it became more or 
less a regular habit for kings to make such a declaration on first as- 
suming power, and many were forced to repeat it periodically over the 
course of their reigns. 

In Sumeria, these were called "declarations of freedom" — and it 
is significant that the Sumerian word amargi, the first recorded word 
for "freedom" in any known human language, literally means "return 
to mother" — since this is what freed debt-peons were finally allowed 
to do. 55 

Michael Hudson argues that Mesopotamian kings were only in 
a position to do this because of their cosmic pretensions: in taking 
power, they saw themselves as literally recreating human society, and 
so were in a position to wipe the slate clean of all previous moral ob- 
ligations. Still, this is about as far from what primordial-debt theorists 
had in mind as one could possibly imagine. 56 

Probably the biggest problem in this whole body of literature is the ini- 
tial assumption: that we begin with an infinite debt to something called 



"society." It's this debt to society that we project onto the gods. It's this 
same debt that then gets taken up by kings and national governments. 

What makes the concept of society so deceptive is that we assume 
the world is organized into a series of compact, modular units called 
"societies," and that all people know which one they're in. Histori- 
cally, this is very rarely the case. Imagine I am a Christian Armenian 
merchant living under the reign of Genghis Khan. What is "society" 
for me? Is it the city where I grew up, the society of international 
merchants (with its own elaborate codes of conduct) within which I 
conduct my daily affairs, other speakers of Armenian, Christendom (or 
maybe just Orthodox Christendom), or the inhabitants of the Mongol 
empire itself, which stretched from the Mediterranean to Korea? His- 
torically, kingdoms and empires have rarely been the most important 
reference points in peoples' lives. Kingdoms rise and fall; they also 
strengthen and weaken; governments may make their presence known 
in people's lives quite sporadically, and many people in history were 
never entirely clear whose government they were actually in. Even until 
quite recently, many of the world's inhabitants were never even quite 
sure what country they were supposed to be in, or why it should mat- 
ter. My mother, who was born a Jew in Poland, once told me a joke 
from her childhood: 

There was a small town located along the frontier between 
Russia and Poland; no one was ever quite sure to which it 
belonged. One day an official treaty was signed and not long 
after, surveyors arrived to draw a border. Some villagers ap- 
proached them where they had set up their equipment on a 
nearby hill. 

"So where are we, Russia or Poland?" 

"According to our calculations, your village now begins ex- 
actly thirty-seven meters into Poland." 

The villagers immediately began dancing for joy. 

"Why?" the surveyors asked. "What difference does it 

"Don't you know what this means?" they replied. "It means 
we'll never have to endure another one of those terrible Rus- 
sian winters!" 

However, if we are born with an infinite debt to all those people 
who made our existence possible, but there is no natural unit called 
"society" — then who or what exactly do we really owe it to? Everyone? 
Everything? Some people or things more than others? And how do we 



pay a debt to something so diffuse? Or, perhaps more to the point, who 
exactly can claim the authority to tell us how we can repay it, and on 
what grounds? 

If we frame the problem that way, the authors of the Brahmanas 
are offering a quite sophisticated reflection on a moral question that no 
one has really ever been able to answer any better before or since. As I 
say, we can't know much about the conditions under which those texts 
were composed, but such evidence as we do have suggests that the 
crucial documents date from sometime between 500 and 400 bc — that 
is, roughly the time of Socrates — which in India appears to have been 
just around the time that a commercial economy, and institutions like 
coined money and interest-bearing loans were beginning to become 
features of everyday life. The intellectual classes of the time were, 
much as they were in Greece and China, grappling with the implica- 
tions. In their case, this meant asking: What does it mean to imagine 
our responsibilities as debts? To whom do we owe our existence? 

It's significant that their answer did not make any mention either 
of "society" or states (though certainly kings and governments certainly 
existed in early India). Instead, they fixed on debts to gods, to sages, to 
fathers, and to "men." It wouldn't be at all difficult to translate their 
formulation into more contemporary language. We could put it this 
way. We owe our existence above all: 

• To the universe, cosmic forces, as we would put it now, to Nature. 
The ground of our existence. To be repaid through ritual: ritual be- 
ing an act of respect and recognition to all that beside which we are 
small. 57 

• To those who have created the knowledge and cultural accom- 
plishments that we value most; that give our existence its form, its 
meaning, but also its shape. Here we would include not only the 
philosophers and scientists who created our intellectual tradition 
but everyone from William Shakespeare to that long-since-forgotten 
woman, somewhere in the Middle East, who created leavened bread. 
We repay them by becoming learned ourselves and contributing to 
human knowledge and human culture. 

• To our parents, and their parents — our ancestors. We repay them by 
becoming ancestors. 

• To humanity as a whole. We repay them by generosity to strang- 
ers, by maintaining that basic communistic ground of sociality that 
makes human relations, and hence life, possible. 



Set out this way, though, the argument begins to undermine its 
very premise. These are nothing like commercial debts. After all, one 
might repay one's parents by having children, but one is not gener- 
ally thought to have repaid one's creditors if one lends the cash to 
someone else. 58 

Myself, I wonder: Couldn't that really be the point? Perhaps what 
the authors of the Brahmanas were really demonstrating was that, in 
the final analysis, our relation with the cosmos is ultimately nothing like 
a commercial transaction, nor could it be. That is because commercial 
transactions imply both equality and separation. These examples are 
all about overcoming separation: you are free from your debt to your 
ancestors when you become an ancestor; you are free from your debt 
to the sages when you become a sage, you are free from your debt to 
humanity when you act with humanity. All the more so if one is speak- 
ing of the universe. If you cannot bargain with the gods because they 
already have everything, then you certainly cannot bargain with the 
universe, because the universe is everything — and that everything neces- 
sarily includes yourself. One could in fact interpret this list as a subtle 
way of saying that the only way of "freeing oneself" from the debt was 
not literally repaying debts, but rather showing that these debts do 
not exist because one is not in fact separate to begin with, and hence 
that the very notion of canceling the debt, and achieving a separate, 
autonomous existence, was ridiculous from the start. Or even that the 
very presumption of positing oneself as separate from humanity or the 
cosmos, so much so that one can enter into one-to-one dealings with 
it, is itself the crime that can be answered only by death. Our guilt is 
not due to the fact that we cannot repay our debt to the universe. Our 
guilt is our presumption in thinking of ourselves as being in any sense 
an equivalent to Everything Else that Exists or Has Ever Existed, so as 
to be able to conceive of such a debt in the first place. 19 

Or let us look at the other side of the equation. Even if it is pos- 
sible to imagine ourselves as standing in a position of absolute debt to 
the cosmos, or to humanity, the next question becomes: Who exactly 
has a right to speak for the cosmos, or humanity, to tell us how that 
debt must be repaid? If there's anything more preposterous than claim- 
ing to stand apart from the entire universe so as to enter into negotia- 
tions with it, it is claiming to speak for the other side. 

If one were looking for the ethos for an individualistic society such 
as our own, one way to do it might well be to say: we all owe an infinite 
debt to humanity, society, nature, or the cosmos (however one prefers 
to frame it), but no one else could possibly tell us how we are to pay it. 
This at least would be intellectually consistent. If so, it would actually 



be possible to see almost all systems of established authority — religion, 
morality, politics, economics, and the criminal-justice system — as so 
many different fraudulent ways to presume to calculate what cannot 
be calculated, to claim the authority to tell us how some aspect of that 
unlimited debt ought to be repaid. Human freedom would then be our 
ability to decide for ourselves how we want to do so. 

No one, to my knowledge, has ever taken this approach. In- 
stead, theories of existential debt always end up becoming wa-ys of 
justifying — or laying claim to — structures of authority. The case of 
the Hindu intellectual tradition is telling here. The debt to humanity 
appears only in a few early texts, and is quickly forgotten. Almost all 
later Hindu commentators ignore it and instead put their emphasis on 
a man's debt to his father. 60 

Primordial-debt theorists have other fish to fry. They are not really 
interested in the cosmos, but actually, in "society." 

Let me return again to that word, "society." The reason that it 
seems like such a simple, self-evident concept is because we mostly 
use it as a synonym for "nation." After all, when Americans speak of 
paying their debt to society, they are not thinking of their responsibili- 
ties to people who live in Sweden. It's only the modern state, with its 
elaborate border controls and social policies, that enables us to imagine 
"society" in this way, as a single bounded entity. This is why project- 
ing that notion backwards into Vedic or Medieval times will always be 
deceptive, even though we don't really have another word. 

It seems to me that this is exactly what the primordial-debt theo- 
rists are doing: projecting such a notion backwards. 

Really, the whole complex of ideas they are talking about — the 
notion that there is this thing called society, that we have a debt to it, 
that governments can speak for it, that it can be imagined as a sort of 
secular god — all of these ideas emerged together around the time of the 
French Revolution, or in its immediate wake. In other words, it was 
born alongside the idea of the modern nation-state. 

We can already see them coming together clearly in the work of 
Auguste Comte, in early nineteenth-century France. Comte, a phi- 
losopher and political pamphleteer now most famous for having first 
coined the term "sociology," went so far, by the end of his life, as 
actually proposing a Religion of Society, which he called Positivism, 



broadly modeled on Medieval Catholicism, replete with vestments 
where all the buttons were on the back (so they couldn't be put on 
without the help of others). In his last work, which he called a "Positiv- 
ist Catechism," he also laid down the first explicit theory of social debt. 
At one point someone asks an imaginary Priest of Positivism what he 
thinks of the notion of human rights. The priest scoffs at the very idea. 
This is nonsense, he says, an error born of individualism. Positivism 
understands only duties. After all: 

We are born under a load of obligations of every kind, to our 
predecessors, to our successors, to our contemporaries. After 
our birth these obligations increase or accumulate before the 
point where we are capable of rendering anyone any service. 
On what human foundation, then, could one seat the idea of 
"rights"? 61 

While Comte doesn't use the word "debt," the sense is clear enough. 
We have already accumulated endless debts before we get to the age at 
which we can even think of paying them. By that time, there's no way 
to calculate to whom we even owe them. The only way to redeem our- 
selves is to dedicate ourselves to the service of Humanity as a whole. 

In his lifetime, Comte was considered something of a crackpot, but 
his ideas proved influential. His notion of unlimited obligations to so- 
ciety ultimately crystallized in the notion of the "social debt," a notion 
taken up among social reformers and, eventually, socialist politicians in 
many parts of Europe and abroad. 62 "We are all born as debtors to so- 
ciety": in France the notion of a social debt soon became something of 
a catchphrase, a slogan, and eventually a cliche. 63 The state, according 
to this view, was merely the administrator of an existential debt that 
all of us have to the society that created us, embodied not least in the 
fact that we all continue to be completely dependent on one another for 
our existence, even if we are not completely aware of how. 

These are also the intellectual and political circles that shaped the 
thought of Emile Durkheim, the founder of the discipline of sociology 
that we know today, who in a way did Comte one better by arguing 
that all gods in all religions are always already projections of society — 
so an explicit religion of society would not even be necessary. All 
religions, for Durkheim, are simply ways of recognizing our mutual 
dependence on one another, a dependence that affects us in a million 
ways that we are never entirely aware of. "God" and "society" are 
ultimately the same. 



The problem is that for several hundred years now, it has simply 
been assumed that the guardian of that debt we owe for all of this, the 
legitimate representatives of that amorphous social totality that has al- 
lowed us to become individuals, must necessarily be the state. Almost 
all socialist or socialistic regimes end up appealing to some version of 
this argument. To take one notorious example, this was how the Soviet 
Union used to justify forbidding their citizens from emigrating to other 
countries. The argument was always: The USSR created these people, 
the USSR raised and educated them, made them who they are. What 
right do they have to take the product of our investment and transfer 
it to another country, as if they didn't owe us anything? Neither is this 
rhetoric restricted to socialist regimes. Nationalists appeal to exactly 
the same kind of arguments — especially in times of war. And all mod- 
ern governments are nationalist to some degree. 

One might even say that what we really have, in the idea of pri- 
mordial debt, is the ultimate nationalist myth. Once we owed our lives 
to the gods that created us, paid interest in the form of animal sacrifice, 
and ultimately paid back the principal with our lives. Now we owe it 
to the Nation that formed us, pay interest in the form of taxes, and 
when it comes time to defend the nation against its enemies, to offer 
to pay it with our lives. 

This is a great trap of the twentieth century: on one side is the logic 
of the market, where we like to imagine we all start out as individuals 
who don't owe each other anything. On the other is the logic of the 
state, where we all begin with a debt we can never truly pay. We are 
constantly told that they are opposites, and that between them they 
contain the only real human possibilities. But it's a false dichotomy. 
States created markets. Markets require states. Neither could continue 
without the other, at least, in anything like the forms we would rec- 
ognize today. 

Chapter Four 


We will buy the poor for silver, the 
needy for a pair of sandals. 

— Amos 2:6 

THE READER MAY have noticed that there is an unresolved debate 
between those who see money as a commodity and those who see it 
as an IOU. Which one is it? By now, the answer should be obvious: 
it's both. Keith Hart, probably the best-known current anthropological 
authority on the subject, pointed this out many years ago. There are, 
he famously observed, two sides to any coin: 

Look at a coin from your pocket. On one side is "heads" — the 
symbol of the political authority which minted the coin; on the 
other side is "tails" — the precise specification of the amount 
the coin is worth as payment in exchange. One side reminds us 
that states underwrite currencies and the money is originally a 
relation between persons in society, a token perhaps. The other 
reveals the coin as a thing, capable of entering into definite 
relations with other things. 1 

Clearly, money was not invented to overcome the inconveniences 
of barter between neighbors — since neighbors would have no reason to 
engage in barter in the first place. Still, a system of pure credit money 
would have serious inconveniences as well. Credit money is based on 
trust, and in competitive markets, trust itself becomes a scarce com- 
modity. This is particularly true of dealings between strangers. Within 
the Roman empire, a silver coin stamped with the image of Tiberius 
might have circulated at a value considerably higher than the value of 
the silver it contained. Ancient coins invariably circulated at a value 
higher than their metal content. 2 This was largely because Tiberius's 
government was willing to accept them at face value. However, the 



Persian government probably wasn't, and the Mauryan and Chinese 
governments certainly weren't. Very large numbers of Roman gold and 
silver coins did end up in India and even China; this is presumably the 
main reason that they were made of gold and silver to begin with. 

What's true for a vast empire like Rome or China is obviously 
all the more true for a Sumerian or Greek city-state, let alone anyone 
operating within the kind of broken checkerboard of kingdoms, towns, 
and tiny principalities that prevailed in most of Medieval Europe or 
India. As I've pointed out, often what was inside and what was out- 
side were not especially clear. Within a community — a town, a city, 
a guild or religious society — pretty much anything could function as 
money, provided everyone knew there was someone willing to accept 
it to cancel out a debt. To offer one particularly striking example, in 
certain cities in nineteenth-century Siam, small change consisted en- 
tirely of porcelain Chinese gaming counters — basically, the equivalent 
of poker chips — issued by local casinos. If one of these casinos went 
out of business or lost its license, its owners would have to send a crier 
through the streets banging a gong and announcing that anyone hold- 
ing such chits had three days to redeem them. 3 For major transactions, 
of course, currency that was also acceptable outside the community 
(usually silver or gold again) was ordinarily employed. 

In a similar way, English shops, for many centuries, would issue 
their own wood or lead or leather token money. The practice was often 
technically illegal, but it continued until relatively recent times. Here is 
an example from the seventeenth century, by a certain Henry, who had 
a store at Stony Stratford, Buckinghamshire: 

This is clearly a case of the same principle: Henry would provide 
small change in the form of IOUs redeemable at his own store. As such, 
they might circulate broadly, at least among anyone who did regular 
business at that shop. But they were unlikely to travel very far from 
Stony Stratford — most tokens, in fact, never circulated more than a few 
blocks in any direction. For larger transactions, everyone, including 
Henry, expected money in a form that would be acceptable anywhere, 
including in Italy or France. 4 



Throughout most of history, even where we do find elaborate mar- 
kets, we also find a complex jumble of different sorts of currency. 
Some of these may have originally emerged from barter between for- 
eigners: the cacao money of Mesoamerica or salt money of Ethiopia 
are frequently cited examples. 5 Others arose from credit systems, or 
from arguments over what sort of goods should be acceptable to pay 
taxes or other debts. Such questions were often matters of endless 
contestation. One could often learn a lot about the balance of political 
forces in a given time and place by what sorts of things were accept- 
able as currency. For instance: in much the same way that colonial 
Virginia planters managed to pass a law obliging shopkeepers to ac- 
cept their tobacco as currency, medieval Pomeranian peasants appear 
to have at certain points convinced their rulers to make taxes, fees, 
and customs duties, which were registered in Roman currency, actually 
payable in wine, cheese, peppers, chickens, eggs, and even herring — 
much to the annoyance of traveling merchants, who therefore had 
to either carry such things around in order to pay the tolls or buy 
them locally at prices that would have been more advantageous to 
their suppliers for that very reason. 6 This was in an area with a free 
peasantry, rather than serfs. They were in a relatively strong political 
position. In other times and places, the interests of lords and merchants 
prevailed instead. 

Thus money is almost always something hovering between a com- 
modity and a debt-token. This is probably why coins — pieces of silver 
or gold that are already valuable commodities in themselves, but that, 
being stamped with the emblem of a local political authority, became 
even more valuable — still sit in our heads as the quintessential form 
of money. They most perfectly straddle the divide that defines what 
money is in the first place. What's more, the relation between the two 
was a matter of constant political contestation. 

In other words, the battle between state and market, between gov- 
ernments and merchants is not inherent to the human condition. 

I I I I I 

Our two origin stories — the myth of barter and the myth of primordial 
debt — may appear to be about as far apart as they could be, but in 
their own way, they are also two sides of the same coin. One assumes 
the other. It's only once we can imagine human life as a series of com- 
mercial transactions that we're capable of seeing our relation to the 
universe in terms of debt. 



To illustrate, let me call a perhaps surprising witness, Friedrich 
Nietzsche, a man able to see with uncommon clarity what happens 
when you try to imagine the world in commercial terms. 

Nietzsche's On the Genealogy of Morals appeared in 1887. In it, he 
begins with an argument that might well have been taken directly from 
Adam Smith — but he takes it a step further than Smith ever dared to, 
insisting that not just barter, but buying and selling itself, precede any 
other form of human relationship. The feeling of personal obligation, 
he observes, 

has its origin in the oldest and most primitive personal rela- 
tionship there is, in the relationship between seller and buyer, 
creditor and debtor. Here for the first time one person moved 
up against another person, here an individual measured himself 
against another individual. We have found no civilization still 
at such a low level that something of this relationship is not 
already perceptible. To set prices, to measure values, to think 
up equivalencies, to exchange things — that preoccupied man's 
very first thinking to such a degree that in a certain sense 
it's what thinking itself is. Here the oldest form of astuteness 
was bred; here, too, we can assume are the first beginnings of 
man's pride, his feeling of pre-eminence in relation to other 
animals. Perhaps our word "man" (manas) continues to ex- 
press directly something of this feeling of the self: the human 
being describes himself as a being which assesses values, which 
values and measures, as the "inherently calculating animal." 
Selling and buying, together with their psychological attributes, 
are even older than the beginnings of any form of social orga- 
nizations and groupings; out of the most rudimentary form of 
personal legal rights the budding feeling of exchange, contract, 
guilt, law, duty, and compensation was instead first transferred 
to the crudest and earliest social structures (in their relation- 
ships with similar social structures), along with the habit of 
comparing power with power, of measuring, of calculating. 7 

Smith, too, we will remember, saw the origins of language — and 
hence of human thought — as lying in our propensity to "exchange one 
thing for another," in which he also saw the origins of the market. 8 The 
urge to trade, to compare values, is the very thing that makes us intel- 
ligent beings, and different from other animals. Society comes later — 
which means our ideas about responsibilities to other people first take 
shape in strictly commercial terms. 



Unlike with Smith, however, it never occurred to Nietzsche that 
you could have a world where all such transactions immediately cancel 
out. Any system of commercial accounting, he assumed, will produce 
creditors and debtors. In fact, he believed that it was from this very 
fact that human morality emerged. Note, he says, how the German 
word schuld means both "debt" and "guilt." At first, to be in debt 
was simply to be guilty, and creditors delighted in punishing debtors 
unable to repay their loans by inflicting "all sorts of humiliation and 
torture on the body of the debtor, for instance, cutting as much flesh 
off as seemed appropriate for the debt." 9 In fact, Nietzsche went so far 
as to insist that those original barbarian law codes that tabulated so 
much for a ruined eye, so much for a severed finger, were not originally 
meant to fix rates of monetary compensation for the loss of eyes and 
fingers, but to establish how much of the debtor's body creditors were 
allowed to take! Needless to say, he doesn't provide a scintilla of evi- 
dence for this (none exists). 10 But to ask for evidence would be to miss 
the point. We are dealing here not with a real historical argument but 
with a purely imaginative exercise. 

When humans did begin to form communities, Nietzsche contin- 
ues, they necessarily began to imagine their relationship to the com- 
munity in these terms. The tribe provides them with peace and security. 
They are therefore in its debt. Obeying its laws is a way of paying it 
back ("paying your debt to society" again). But this debt, he says, is 
also paid — here too — in sacrifice: 

Within the original tribal cooperatives — we're talking about 
primeval times — the living generation always acknowledged a 
legal obligation to the previous generations, and especially to 
the earliest one which had founded the tribe [ . . . ] Here the 
reigning conviction is that the tribe only exists at all only be- 
cause of the sacrifices and achievements of its ancestors — and 
that people have to pay them back with sacrifices and achieve- 
ments. In this people recognize a debt which keeps steadily 
growing because these ancestors in their continuing existence 
as powerful spirits do not stop giving the tribe new advantages 
and lending them their power. Do they do this for free? But 
there is no "for free" for those raw and "spiritually destitute" 
ages. What can people give back to them? Sacrifices (at first as 
nourishment understood very crudely), festivals, chapels, signs 
of honor, above all, obedience — for all customs, as work of 
one's ancestors, are also their statutes and commands. Do peo- 
ple ever give them enough? This suspicion remains and grows. 11 



In other words, for Nietzsche, starting from Adam Smith's as- 
sumptions about human nature means we must necessarily end up with 
something very much along the lines of primordial-debt theory. On the 
one hand, it is because of our feeling of debt to the ancestors that we 
obey the ancestral laws: this is why we feel that the community has the 
right to react "like an angry creditor" and punish us for our transgres- 
sions if we break them. In a larger sense, we develop a creeping feeling 
that we could never really pay back the ancestors, that no sacrifice (not 
even the sacrifice of our first-born) will ever truly redeem us. We are 
terrified of the ancestors, and the stronger and more powerful a com- 
munity becomes, the more powerful they seem to be, until finally, "the 
ancestor is necessarily transfigured into a god." As communities grow 
into kingdoms and kingdoms into universal empires, the gods them- 
selves come to seem more universal, they take on grander, more cosmic 
pretentions, ruling the heavens, casting thunderbolts — culminating in 
the Christian god, who, as the maximal deity, necessarily "brought 
about the maximum feeling of indebtedness on earth." Even our ances- 
tor Adam is no longer figured as a creditor, but as a transgressor, and 
therefore a debtor, who passes on to us his burden of Original Sin: 

Finally, with the impossibility of discharging the debt, people 
also come up with the notion that it is impossible to remove 
the penance, the idea that it cannot be paid off ("eternal pun- 
ishment") . . . until all of a sudden we confront the paradoxi- 
cal and horrifying expedient with which a martyred humanity 
found temporary relief, that stroke of genius of Christianity: 
God sacrificing himself for the guilt of human beings, God pay- 
ing himself back with himself, God as the only one who can re- 
deem man from what for human beings has become impossible 
to redeem — the creditor sacrificing himself for the debtor, out 
of love (can people believe that?), out of love for his debtor! 12 

It all makes perfect sense if you start from Nietzsche's initial prem- 
ise. The problem is that the premise is insane. 

There is also every reason to believe that Nietzsche knew the prem- 
ise was insane; in fact, that this was the entire point. What Nietzsche 
is doing here is starting out from the standard, common-sense assump- 
tions about the nature of human beings prevalent in his day (and to a 
large extent, still prevalent) — that we are rational calculating machines, 
that commercial self-interest comes before society, that "society" itself 
is just a way of putting a kind of temporary lid on the resulting con- 
flict. That is, he is starting out from ordinary bourgeois assumptions 



and driving them to a place where they can only shock a bourgeois 

It's a worthy game and no one has ever played it better; but it's 
a game played entirely within the boundaries of bourgeois thought. It 
has nothing to say to anything that lies beyond that. The best response 
to anyone who wants to take seriously Nietzsche's fantasies about sav- 
age hunters chopping pieces off each other's bodies for failure to remit 
are the words of an actual hunter-gatherer — an Inuit from Greenland 
made famous in the Danish writer Peter Freuchen's Book of the Es- 
kimo. Freuchen tells how one day, after coming home hungry from an 
unsuccessful walrus-hunting expedition, he found one of the successful 
hunters dropping off several hundred pounds of meat. He thanked him 
profusely. The man objected indignantly: 

"Up in our country we are human!" said the hunter. "And 
since we are human we help each other. We don't like to hear 
anybody say thanks for that. What I get today you may get 
tomorrow. Up here we say that by gifts one makes slaves and 
by whips one makes dogs."' 3 

The last line is something of an anthropological classic, and simi- 
lar statements about the refusal to calculate credits and debits can 
be found through the anthropological literature on egalitarian hunt- 
ing societies. Rather than seeing himself as human because he could 
make economic calculations, the hunter insisted that being truly hu- 
man meant refusing to make such calculations, refusing to measure or 
remember who had given what to whom, for the precise reason that 
doing so would inevitably create a world where we began "comparing 
power with power, measuring, calculating" and reducing each other to 
slaves or dogs through debt. 

It's not that he, like untold millions of similar egalitarian spirits 
throughout history, was unaware that humans have a propensity to 
calculate. If he wasn't aware of it, he could not have said what he 
did. Of course we have a propensity to calculate. We have all sorts of 
propensities. In any real-life situation, we have propensities that drive 
us in several different contradictory directions simultaneously. No one 
is more real than any other. The real question is which we take as 
the foundation of our humanity, and therefore, make the basis of our 
civilization. If Nietzsche's analysis of debt is helpful to us, then, it is 
because it reveals that when we start from the assumption that human 
thought is essentially a matter of commercial calculation, that buying 
and selling are the basis of human society — then, yes, once we begin 



to think about our relationship with the cosmos, we will necessarily 
conceive of it in terms of debt. 

I do think Nietzsche helps us in another way as well: to understand the 
concept of redemption. Niezsche's account of "primeval times" might 
be absurd, but his description of Christianity — of how a sense of debt 
is transformed into an abiding sense of guilt, and guilt to self-loathing, 
and self-loathing to self-torture — all of this does ring very true. 

Why, for instance, do we refer to Christ as the "redeemer"? The 
primary meaning of "redemption" is to buy something back, or to 
recover something that had been given up in security for a loan; to ac- 
quire something by paying off a debt. It is rather striking to think that 
the very core of the Christian message, salvation itself, the sacrifice of 
God's own son to rescue humanity from eternal damnation, should be 
framed in the language of a financial transaction. 

Nietzsche might have been starting from the same assumptions as 
Adam Smith, but clearly the early Christians weren't. The roots of this 
thinking lie deeper than Smith's with his nation of shopkeepers. The 
authors of the Brahmanas were not alone in borrowing the language 
of the marketplace as a way of thinking about the human condition. 
Indeed, to one degree or another, all the major world religions do this. 

The reason is that all of them — from Zoroastrianism to Islam — 
arose amidst intense arguments about the role of money and the mar- 
ket in human life, and particularly about what these institutions meant 
for fundamental questions of what human beings owed to one another. 
The question of debt, and arguments about debt, ran through every 
aspect of the political life of the time. These arguments were set amidst 
revolts, petitions, reformist movements. Some such movements gained 
allies in the temples and palaces. Others were brutally suppressed. 
Most of the terms, slogans, and specific issues being debated, though, 
have been lost to history. We just don't know what a political debate 
in a Syrian tavern in 750 bc was likely to be about. As a result, we have 
spent thousands of years contemplating sacred texts full of political 
allusions that would have been instantly recognizable to any reader at 
the time when they were written, but whose meaning we now can only 
guess at. 14 

One of the unusual things about the Bible is that it preserves some 
bits of this larger context. To return to the notion of redemption: 
the Hebrew words padah and goal, both translated as "redemption," 
could be used for buying back anything one had sold to someone else, 



particularly the recovery of ancestral land, or to recovering some ob- 
ject held by creditors in way of a pledge. 15 The example foremost in 
the minds of prophets and theologians seems to have been the last: the 
redemption of pledges, and especially, of family members held as debt- 
pawns. It would seem that the economy of the Hebrew kingdoms, by 
the time of the prophets, was already beginning to develop the same 
kind of debt crises that had long been common in Mesopotamia: espe- 
cially in years of bad harvests, the poor became indebted to rich neigh- 
bors or to wealthy moneylenders in the towns, they would begin to 
lose title to their fields and to become tenants on what had been their 
own land, and their sons and daughters would be removed to serve as 
servants in their creditors' households, or even sold abroad as slaves. 16 
The earlier prophets contain allusions to such crises, but the book of 
Nehemiah, written in Persian times, is the most explicit: 17 

Some also there were that said, "We have mortgaged our lands, 
vineyards, and houses, that we might buy corn, because of the 

There were also those that said, "We have borrowed money 
for the king's tribute, and that upon our lands and vineyards. 

"Yet now our flesh is as the flesh of our brethren, our chil- 
dren as their children: and, lo, we bring into bondage our sons 
and our daughters to be servants, and some of our daughters 
are brought unto bondage already: neither is it in our power 
to redeem them; for other men have our lands and vineyards." 

And I was very angry when I heard their cry and these 

Then I consulted with myself, and I rebuked the nobles, and 
the rulers, and said unto them, "Ye exact usury, every one of 
his brother." And I set a great assembly against them. 18 

Nehemiah was a Jew born in Babylon, a former cup-bearer to the 
Persian emperor. In 444 bc, he managed to talk the Great King into 
appointing him governor of his native Judaea. He also received per- 
mission to rebuild the Temple in Jerusalem that had been destroyed 
by Nebuchadnezzar more than two centuries earlier. In the course of 
rebuilding, sacred texts were recovered and restored; in a sense, this 
was the moment of the creation of what we now consider Judaism. 

The problem was that Nehemiah quickly found himself confronted 
with a social crisis. All around him, impoverished peasants were un- 
able to pay their taxes; creditors were carrying off the children of the 
poor. His first response was to issue a classic Babylonian-style "clean 



slate" edict — having himself been born in Babylon, he was clearly fa- 
miliar with the general principle. All non-commercial debts were to be 
forgiven. Maximum interest rates were set. At the same time, though, 
Nehemiah managed to locate, revise, and reissue much older Jewish 
laws, now preserved in Exodus, Deuteronomy, and Leviticus, which 
in certain ways went even further, by institutionalizing the principle. 19 
The most famous of these is the Law of Jubilee: a law that stipulated 
that all debts would be automatically cancelled "in the Sabbath year" 
(that is, after seven years had passed), and that all who languished in 
bondage owing to such debts would be released. 20 

"Freedom," in the Bible, as in Mesopotamia, came to refer above 
all to release from the effects of debt. Over time, the history of the Jew- 
ish people itself came to be interpreted in this light: the liberation from 
bondage in Egypt was God's first, paradigmatic act of redemption; the 
historical tribulations of the Jews (defeat, conquest, exile) were seen 
as misfortunes that would eventually lead to a final redemption with 
the coming of the Messiah — though this could only be accomplished, 
prophets such as Jeremiah warned them, after the Jewish people truly 
repented of their sins (carrying each other off into bondage, whoring 
after false gods, the violation of commandments). 21 In this light, the 
adoption of the term by Christians is hardly surprising. Redemption 
was a release from one's burden of sin and guilt, and the end of history 
would be that moment when all slates are wiped clean and all debts 
finally lifted when a great blast from angelic trumpets will announce 
the final Jubilee. 

If so, "redemption" is no longer about buying something back. 
It's really more a matter of destroying the entire system of account- 
ing. In many Middle Eastern cities, this was literally true: one of the 
common acts during debt cancelation was the ceremonial destruction 
of the tablets on which financial records had been kept, an act to be 
repeated, much less officially, in just about every major peasant revolt 
in history. 22 

This leads to another problem: What is possible in the meantime, 
before that final redemption comes? In one of his more disturbing 
parables, the Parable of the Unforgiving Servant, Jesus seemed to be 
explicitly playing with the problem: 

Therefore, the kingdom of heaven is like a king who wanted to 
settle accounts with his servants. As he began the settlement, a 
man who owed him ten thousand talents was brought to him. 
Since he was not able to pay, the master ordered that he and 



his wife and his children and all that he had be sold to repay 
the debt. 

The servant fell on his knees before him. "Be patient with 
me," he begged, "and I will pay back everything." The servant's 
master took pity on him, canceled the debt, and let him go. 

But when that servant went out, he found one of his fellow 
servants who owed him a hundred denarii. He grabbed him 
and began to choke him. "Pay back what you owe me!" he 

His fellow servant fell to his knees and begged him, "Be 
patient with me, and I will pay you back." 

But he refused. Instead, he went off and had the man thrown 
into prison until he could pay the debt. When the other ser- 
vants saw what had happened, they were greatly distressed and 
went and told their master everything that had happened. 

Then the master called the servant in. "You wicked ser- 
vant," he said, "I canceled all that debt of yours because you 
begged me to. Shouldn't you have had mercy on your fellow 
servant just as I had on you?" In anger his master turned him 
over to the jailers to be tortured, until he should pay back all 
he owed. 23 

This is quite an extraordinary text. On one level it's a joke; in oth- 
ers, it could hardly be more serious. 

We begin with the king wishing to "settle accounts" with his ser- 
vants. The premise is absurd. Kings, like gods, can't really enter into 
relations of exchange with their subjects, since no parity is possible. 
And this is a king who clearly is God. Certainly there can be no final 
settling of accounts. 

So at best we are dealing with an act of whimsy on the king's part. 
The absurdity of the premise is hammered home by the sum the first 
man brought before him is said to owe. In ancient Judaea, to say some- 
one owes a creditor "ten thousand talents" would be like now saying 
someone owes "a hundred billion dollars." The number is a joke, too; 
it simply stands in for "a sum no human being could ever, conceivably, 
repay." 24 

Faced with infinite, existential debt, the servant can only tell obvi- 
ous lies: "a hundred billion? Sure, I'm good for it! Just give me a little 
more time." Then, suddenly, apparently just as arbitrarily, the Lord 
forgives him. 

Yet, it turns out, the amnesty has a condition he is not aware of. It 
is incumbent on his being willing to act in an analogous way to other 



humans — in this particular case, another servant who owes him (to 
translate again into contemporary terms), maybe a thousand bucks. 
Failing the test, the human is cast into hell for all eternity, or "until he 
should pay back all he owed," which in this case comes down to the 
same thing. 

The parable has long been a challenge to theologians. It's normally 
interpreted as a comment on the endless bounty of God's grace and 
how little He demands of us in comparison — and thus, by implication, 
as a way of suggesting that torturing us in hell for all eternity is not 
as unreasonable as it might seem. Certainly, the unforgiving servant is 
a genuinely odious character. Still, what is even more striking to me 
is the tacit suggestion that forgiveness, in this world, is ultimately im- 
possible. Christians practically say as much every time they recite the 
Lord's Prayer, and ask God to "forgive us our debts, as we also forgive 
our debtors." 25 It repeats the story of the parable almost exactly, and 
the implications are similarly dire. After all, most Christians reciting 
the prayer are aware that they do not generally forgive their debtors. 
Why then should God forgive them their sins? 26 

What's more, there is the lingering suggestion that we really 
couldn't live up to those standards, even if we tried. One of the things 
that makes the Jesus of the New Testament such a tantalizing character 
is that it's never clear what he's telling us. Everything can be read two 
ways. When he calls on his followers to forgive all debts, refuse to cast 
the first stone, turn the other cheek, love their enemies, to hand over 
their possessions to the poor — is he really expecting them to do this? 
Or are such demands just a way of throwing in their faces that, since 
we are clearly not prepared to act this way, we are all sinners whose 
salvation can only come in another world — a position that can be (and 
has been) used to justify almost anything? This is a vision of human life 
as inherently corrupt, but it also frames even spiritual affairs in com- 
mercial terms: with calculations of sin, penance, and absolution, the 
Devil and St. Peter with their rival ledger books, usually accompanied 
by the creeping feeling that it's all a charade because the very fact that 
we are reduced to playing such a game of tabulating sins reveals us to 
be fundamentally unworthy of forgiveness. 

World religions, as we shall see, are full of this kind of ambiva- 
lence. On the one hand they are outcries against the market; on the 
other, they tend to frame their objections in commercial terms — as if 
to argue that turning human life into a series of transactions is not a 
very good deal. What I think even these few examples reveal, though, 
is how much is being papered over in the conventional accounts of the 
origins and history of money. There is something almost touchingly 



naive in the stories about neighbors swapping potatoes for an extra 
pair of shoes. When the ancients thought about money, friendly swaps 
were hardly the first thing that came to mind. 

True, some might have thought about their tab at the local ale- 
house, or, if they were a merchant or administrator, of storehouses, 
account books, exotic imported delights. For most, though, what was 
likely to come to mind was the selling of slaves and ransoming of pris- 
oners, corrupt tax-farmers and the depredations of conquering armies, 
mortgages and interest, theft and extortion, revenge and punishment, 
and, above all, the tension between the need for money to create fami- 
lies, to acquire a bride so as to have children, and use of that same 
money to destroy families — to create debts that lead to the same wife 
and children being taken away. "Some of our daughters are brought 
unto bondage already: neither is it in our power to redeem them." One 
can only imagine what those words meant, emotionally, to a father in 
a patriarchal society in which a man's ability to protect the honor of 
his family was everything. Yet this is what money meant to the ma- 
jority of people for most of human history: the terrifying prospect of 
one's sons and daughters being carried off to the homes of repulsive 
strangers to clean their pots and provide the occasional sexual services, 
to be subject to every conceivable form of violence and abuse, pos- 
sibly for years, conceivably forever, as their parents waited, helpless, 
avoiding eye contact with their neighbors, who knew exactly what was 
happening to those they were supposed to have been able to protect. 27 
Clearly this was the worst thing that could happen to anyone — which 
is why, in the parable, it could be treated as interchangeable with be- 
ing "turned over to the jailors to be tortured" for life. And that's just 
from the perspective of the father. One can only imagine how it might 
have felt to be the daughter. Yet, over the course of human history, 
untold millions of daughters have known (and in fact many still know) 
exactly what it's like. 

One might object that this was just assumed to be in the nature 
of things: like the imposition of tribute on conquered populations, it 
might have been resented, but it wasn't considered a moral issue, a 
matter of right and wrong. Some things just happen. This has been the 
most common attitude of peasants to such phenomena throughout hu- 
man history. What's striking about the historical record is that in the 
case of debt crises, this was not how many reacted. Many actually did 
become indignant. So many, in fact, that most of our contemporary 
language of social justice, our way of speaking of human bondage and 
emancipation, continues to echo ancient arguments about debt. 



It's particularly striking because so many other things do seem to 
have been accepted as simply in the nature of things. One does not see 
a similar outcry against caste systems, for example, or for that matter, 
the institution of slavery. 28 Surely slaves and untouchables often experi- 
enced at least equal horrors. No doubt many protested their condition. 
Why was it that the debtors' protests seemed to carry such greater 
moral weight? Why were debtors so much more effective in winning 
the ear of priests, prophets, officials, and social reformers? Why was it 
that officials like Nehemiah were willing to give such sympathetic con- 
sideration to their complaints, to inveigh, to summon great assemblies? 

Some have suggested practical reasons: debt crises destroyed the 
free peasantry, and it was free peasants who were drafted into ancient 
armies to fight in wars. 29 No doubt this was a factor; clearly it wasn't 
the only one. There is no reason to believe that Nehemiah, for instance, 
in his anger at the usurers, was primarily concerned with his ability 
to levy troops for the Persian king. It is something more fundamental. 

What makes debt different is that it is premised on an assumption 
of equality. 

To be a slave, or lower-caste, is to be intrinsically inferior. We are 
dealing with relations of unadulterated hierarchy. In the case of debt, 
we are dealing with two individuals who begin as equal parties to a 
contract. Legally, at least as far as the contract is concerned, they are 
the same. 

We can add that, in the ancient world, when people who actually 
were more or less social equals loaned money to one another, the terms 
appear to have normally been quite generous. Often no interest was 
charged, or if it was, it was very low. "And don't charge me interest," 
wrote one wealthy Canaanite to another, in a tablet dated around 
1200 bc, "after all, we are both gentlemen." 30 Between close kin, many 
"loans" were probably, then as now, just gifts that no one seriously 
expected to recover. Loans between rich and poor were something 
else again. 

The problem was that, unlike status distinctions like caste or slav- 
ery, the line between rich and poor was never precisely drawn. One can 
imagine the reaction of a farmer who went up to the house of a wealthy 
cousin, on the assumption that "humans help each other," and ended 
up, a year or two later, watching his vineyard seized and his sons and 
daughters led away. Such behavior could be justified, in legal terms, by 
insisting that the loan was not a form of mutual aid but a commercial 
relationship — a contract is a contract. (It also required a certain reli- 
able access to superior force.) But it could only have felt like a terrible 
betrayal. What's more, framing it as a breach of contract meant stating 



that this was, in fact, a moral issue: these two parties ought to be 
equals, but one had failed to honor the bargain. Psychologically, this 
can only have made the indignity of the debtor's condition all the more 
painful, since it made it possible to say that it was his own turpitude 
that sealed his daughter's fate. But that just made the motive all the 
more compelling to throw back the moral aspersions: "Our flesh is as 
the flesh of our brethren, our children as their children." We are all the 
same people. We have a responsibility to take account of one another's 
needs and interests. How then could my brother do this to me? 

In the Old Testament case, debtors were able to marshal a particu- 
larly powerful moral argument — as the authors of Deuteronomy con- 
stantly reminded their readers, were not the Jews all slaves in Egypt, 
and had they not all been redeemed by God? Was it right, when they 
had all been given this promised land to share, for some to take that 
land away from others? Was it right for a population of liberated slaves 
to go about enslaving one aother's children? 31 But analogous arguments 
were being made in similar situations almost everywhere in the ancient 
world: in Athens, in Rome, and for that matter, in China — where leg- 
end had it that coinage itself was first invented by an ancient emperor 
to redeem the children of families who had been forced to sell them 
after a series of devastating floods. 

Through most of history, when overt political conflict between 
classes did appear, it took the form of pleas for debt cancellation — the 
freeing of those in bondage, and usually, a more just reallocation of 
the land. What we see, in the Bible and other religious traditions, are 
traces of the moral arguments by which such claims were justified, usu- 
ally subject to all sorts of imaginative twists and turns, but inevitably, 
to some degree, incorporating the language of the marketplace itself. 

Chapter Five 


TO TELL THE HISTORY of debt, then, is also necessarily to recon- 
struct how the language of the marketplace has come to pervade every 
aspect of human life — even to provide the terminology for the moral 
and religious voices ostensibly raised against it. We have already seen 
how both Vedic and Christian teachings thus end up making the same 
curious move: first describing all morality as debt, but then, in their 
very manner of doing so, demonstrating that morality cannot really be 
reduced to debt, that it must be grounded in something else. 1 

But what? Religious traditions prefer vast, cosmological answers: 
the alternative to the morality of debt lies in recognition of continu- 
ity with the universe, or life in the expectation of the imminent an- 
nihilation of the universe, or absolute subordination to the deity, or 
withdrawal into another world. My own aims are more modest, so I 
will take the opposite approach. If we really want to understand the 
moral grounds of economic life, and by extension, human life, it seems 
to me that we must start instead with the very small things: the every- 
day details of social existence, the way we treat our friends, enemies, 
and children — often with gestures so tiny (passing the salt, bumming 
a cigarette) that we ordinarily never stop to think about them at all. 
Anthropology has shown us just how different and numerous are the 
ways in which humans have been known to organize themselves. But 
it also reveals some remarkable commonalities — fundamental moral 
principles that appear to exist everywhere, and that will always tend to 
be invoked, wherever people transfer objects back and forth or argue 
about what other people owe them. 

One of the reasons that human life is so complicated, in turn, is 
because many of these principles contradict one another. As we will 
see, they are constantly pulling us in radically different directions. The 
moral logic of exchange, and hence of debt, is only one; in any given 
situation, there are likely to be completely different principles that 



could be brought to bear. In this sense, the moral confusion discussed 
in the first chapter is hardly new; in a sense, moral thought is founded 
on this very tension. 

To really understand what debt is, then, it will be necessary to un- 
derstand how it's different from other sorts of obligation that human 
beings might have to one another — which, in turn, means mapping 
out what those other sorts of obligation actually are. Doing so, how- 
ever, poses peculiar challenges. Contemporary social theory — economic 
anthropology included — offers surprisingly little help in this regard. 
There's an enormous anthropological literature on gifts, for instance, 
starting with the French anthropologist Marcel Mauss's essay of 1925, 
even on "gift economies" that operate on completely different prin- 
ciples than market economies — but in the end, almost all this literature 
concentrates on the exchange of gifts, assuming that whenever one 
gives a gift, this act incurs a debt, and the recipient must eventually 
reciprocate in kind. Much as in the case of the great religions, the 
logic of the marketplace has insinuated itself even into the thinking of 
those who are most explicitly opposed to it. As a result, I am going 
to have to start over here, to create a new theory, pretty much from 

Part of the problem is the extraordinary place that economics cur- 
rently holds in the social sciences. In many ways it is treated as a kind 
of master discipline. Just about anyone who runs anything important 
in America is expected to have some training in economic theory, or at 
least to be familiar with its basic tenets. As a result, those tenets have 
come to be treated as received wisdom, as basically beyond question 
(one knows one is in the presence of received wisdom when, if one 
challenges it, the first reaction is to treat one as simply ignorant — 
"You obviously have never heard of the Laffer Curve"; "Clearly you 
need a course in Economics 101" — the theory is seen as so obviously 
true that no one who understands it could possibly disagree.) What's 
more, those branches of social theory that make the greatest claims to 
"scientific status" — "rational choice theory," for instance — start from 
the same assumptions about human psychology that economists do: 
that human beings are best viewed as self-interested actors calculating 
how to get the best terms possible out of any situation, the most profit 
or pleasure or happiness for the least sacrifice or investment — curious, 
considering experimental psychologists have demonstrated over and 
over again that these assumptions simply aren't true. 2 



From early on, there were those who wished to create a theo- 
ry of social interaction grounded in a more generous view of human 
nature — insisting that moral life comes down to something more than 
mutual advantage, that it is motivated above all by a sense of justice. 
The key term here became "reciprocity," the sense of equity, balance, 
fairness, and symmetry, embodied in our image of justice as a set of 
scales. Economic transactions were just one variant of the principle 
of balanced exchange — and one that had a notorious tendency to go 
awry. But if one examines matters closely, one finds that all human 
relations are based on some variation on reciprocity. 

In the 1950s, '60s and '70s, there was something of a craze for this 
sort of thing, in the guise of what was then called "exchange theory," 
developed in infinite variations, from George Homans' "Social Ex- 
change Theory" in the United States to Claude Levi-Strauss's Structur- 
alism in France. Levi-Strauss, who became a kind of intellectual god in 
anthropology, made the extraordinary argument that human life could 
be imagined as consisting of three spheres: language (which consisted 
of the exchange of words), kinship (which consisted of the exchange of 
women), and economics (which consisted of the exchange of things). 
All three, he insisted, were governed by the same fundamental law of 
reciprocity. 3 

Levi-Strauss's star is fallen now, and such extreme statements seem, 
in retrospect, a little bit ridiculous. Still, it's not as if anyone has pro- 
posed a bold new theory to replace all this. Instead, the assumptions 
have simply retreated into the background. Almost everyone continues 
to assume that in its fundamental nature, social life is based on the 
principle of reciprocity, and therefore that all human interaction can 
best be understood as a kind of exchange. If so, then debt really is at 
the root of all morality, because debt is what happens when some bal- 
ance has not yet been restored. 

But can all justice really be reduced to reciprocity? It's easy enough 
to come up with forms of reciprocity that don't seem particularly just. 
"Do unto others as you would wish others to do unto you" might seem 
like an excellent foundation for a system of ethics, but for most of us, 
"an eye for an eye" does not evoke justice so much as vindictive brutal- 
ity. 4 "One good turn deserves another" is a pleasant sentiment, but "I'll 
scratch your back, you scratch mine" is shorthand for political corrup- 
tion. Conversely, there are relationships that seem clearly moral but 
appear to have nothing to do with reciprocity. The relation between 
mother and child is an oft-cited example. Most of us learn our sense of 
justice and morality first from our parents. Yet it is extremely difficult 
to see the relatiqn between parent and child as particularly reciprocal. 



Would we really be willing to conclude that therefore it is not a moral 
relationship? That it has nothing to do with justice? 

The Canadian novelist Margaret Atwood begins a recent book on 
debt with a similar paradox: 

Nature Writer Ernest Thompson Seton had an odd bill pre- 
sented to him on his twenty-first birthday. It was a record kept 
by his father of all the expenses connected with young Ernest's 
childhood and youth, including the fee charged by the doctor 
for delivering him. Even more oddly, Ernest is said to have paid 
it. I used to think that Mr. Seton Senior was a jerk, but now 
I'm wondering. 5 

Most of us wouldn't wonder much. Such behavior seems mon- 
strous, inhuman. Certainly Seton did: he paid the bill, but never spoke 
to his father again afterward. 6 And in a way, this is precisely why the 
presentation of such a bill seems so outrageous. Squaring accounts 
means that the two parties have the ability to walk away from each 
other. By presenting it, his father suggested he'd just as soon have noth- 
ing further to do with him. 

In other words, while most of us can imagine what we owe to our 
parents as a kind of debt, few of us can imagine being able to actually 
pay it — or even that such a debt ever should be paid. Yet if it can't be 
paid, in what sense is it a "debt" at all? And if it is not a debt, what 
is it? 

One obvious place to look for alternatives is in cases of human inter- 
action in which expectations of reciprocity seem to slam into a wall. 
Nineteenth-century travelers' accounts, for instance, are full of this sort 
of thing. Missionaries working in certain parts of Africa would often 
be astounded by the reactions they would receive when they adminis- 
tered medicines. Here's a typical example, from a British missionary 
in Congo: 

A day or two after we reached Vana we found one of the na- 
tives very ill with pneumonia. Comber treated him and kept 
him alive on strong fowl-soup; a great deal of careful nursing 
and attention was visited on him, for his house was beside the 
camp. When we were ready to go on our way again, the man 
was well. To our astonishment he came and asked us for a 



present, and was as astonished and disgusted as he had made 
us to be, when we declined giving it. We suggested that it was 
his place to bring us a present and to show some gratitude. 
He said to us, "Well indeed! You white men have no shame!" 7 

In the early decades of the twentieth century, the French philoso- 
pher Lucien Levy-Bruhl, in an attempt to prove that "natives" oper- 
ated with an entirely different form of logic, compiled a list of similar 
stories: for instance, of a man saved from drowning who proceeded to 
ask his rescuer to give him some nice clothes to wear, or another who, 
on being nursed back to health after having been savaged by a tiger, 
demanded a knife. One French missionary working in Central Africa 
insisted that such things happened to him on a regular basis: 

You save a person's life, and you must expect to receive a visit 
from him before long; you are now under an obligation to him, 
and you will not get rid of him except by giving him presents. 8 

Now, certainly, there is almost always felt to be something ex- 
traordinary about saving a life. Anything surrounding birth and death 
almost cannot help but partake of the infinite, and, therefore, throw 
all everyday means of moral calculation askew. This is probably why 
stories like this had become something of a cliche in America when I 
was growing up. I remember as a child several times being told that 
among the Inuit (or sometimes it was among Buddhists, or Chinese, 
but curiously, never Africans) — that if one saves someone else's life, 
one is considered responsible for taking care of that person forever. 
It defies our sense of reciprocity. But somehow, it also makes a weird 
kind of sense. 

We have no way of knowing what was really going on in the minds 
of the patients in these stories, since we don't know who they were 
or what sort of expectations they had (how they normally interacted 
with their doctors, for example). But we can guess. Let's try a thought 
experiment. Imagine that we are dealing with a place where, if one 
man saved another's life, the two became like brothers. Each was now 
expected to share everything, and to provide for the other when he 
was in need. If so, the patient would surely notice that his new brother 
appeared to be extraordinarily wealthy, not in much need of anything, 
but that he, the patient, was lacking in many things the missionary 
could provide. 

Alternately (and more likely), imagine that we are dealing not with 
a relationship of radical equality but the very opposite. In many parts 



of Africa, accomplished curers were also important political figures 
with extensive clienteles of former patients. A would-be follower thus 
arrives to declare his political allegiance. What complicates the matter 
in this case is that followers of great men, in this part of Africa, were 
in a relatively strong bargaining position. Good henchmen were hard 
to come by; important people were expected to be generous with fol- 
lowers to keep them from joining some rival's entourage instead. If so, 
asking for a shirt or knife would be a way of asking for confirmation 
that the missionary does wish to have the man as a follower. Paying 
him back, in contrast, would be, like Seton's gesture to his father, an 
insult: a way of saying that despite the missionary having saved his life, 
he would just as soon have nothing further to do with him. 

This is a thought experiment — because we don't really know what the 
African patients were thinking. The point is that such forms of radical 
equality and radical inequality do exist in the world, that each carries 
within it its own kind of morality, its own way of thinking and arguing 
about the rights and wrongs of any given situation, and these morali- 
ties are entirely different than that of tit-for-tat exchange. In the rest of 
the chapter, I will provide a rough-and-ready way to map out the main 
possibilities, by proposing that there are three main moral principles 
on which economic relations can be founded, all of which occur in 
any human society, and which I will call communism, hierarchy, and 


I will define communism here as any human relationship that operates 
on the principles of "from each according to their abilities, to each ac- 
cording to their needs." 

I admit that the usage here is a bit provocative. "Communism" is 
a word that can evoke strong emotional reactions — mainly, of course, 
because we tend to identify it with "communist" regimes. This is iron- 
ic, since the Communist parties that ruled over the USSR and its sat- 
ellites, and that still rule China and Cuba, never described their own 
systems as "communist." They described them as "socialist." "Com- 
munism" was always a distant, somewhat fuzzy Utopian ideal, usually 



to be accompanied by the withering away of the state — to be achieved 
at some point in the distant future. 

Our thinking about communism has been dominated by a myth. 
Once upon a time, humans held all things in common — in the Gar- 
den of Eden, during the Golden Age of Saturn, in Paleolithic hunter- 
gatherer bands. Then came the Fall, as a result of which we are now 
cursed with divisions of power and private property. The dream was 
that someday, with the advance of technology and general prosperity, 
with social revolution or the guidance of the Party, we would finally 
be in a position to put things back, to restore common ownership and 
common management of collective resources. Throughout the last two 
centuries, Communists and anti-Communists argued over how plau- 
sible this picture was and whether it would be a blessing or a night- 
mare. But they all agreed on the basic framework: communism was 
about collective property, "primitive communism" did once exist in the 
distant past, and someday it might return. 

We might call this "mythic communism" — or even, "epic 
communism" — a story we like to tell ourselves. Since the days of the 
French Revolution, it has inspired millions; but it has also done enor- 
mous damage to humanity. It's high time, I think, to brush the entire 
argument aside. In fact, "communism" is not some magical Utopia, 
and neither does it have anything to do with ownership of the means 
of production. It is something that exists right now — that exists, to 
some degree, in any human society, although there has never been one 
in which everything has been organized in that way, and it would be 
difficult to imagine how there could be. All of us act like communists 
a good deal of the time. None of us acts like a communist consistently. 
"Communist society" — in the sense of a society organized exclusively 
on that single principle — could never exist. But all social systems, even 
economic systems like capitalism, have always been built on top of a 
bedrock of actually-existing communism. 

Starting, as I say, from the principle of "from each according to 
their abilities, to each according to their needs" allows us to look past 
the question of individual or private ownership (which is often little 
more than formal legality anyway) and at much more immediate and 
practical questions of who has access to what sorts of things and under 
what conditions. 9 Whenever it is the operative principle, even if it's just 
two people who are interacting, we can say we are in the presence of 
a sort of communism. 

Almost everyone follows this principle if they are collaborating on 
some common project. 10 If someone fixing a broken water pipe says, 
"Hand me the wrench," his co-worker will not, generally speaking, 



say, "And what do I get for it?" — even if they are working for Exxon- 
Mobil, Burger King, or Goldman Sachs. The reason is simple efficiency 
(ironically enough, considering the conventional wisdom that "com- 
munism just doesn't work"): if you really care about getting something 
done, the most efficient way to go about it is obviously to allocate tasks 
by ability and give people whatever they need to do them." One might 
even say that it's one of the scandals of capitalism that most capital- 
ist firms, internally, operate communistically. True, they don't tend 
to operate very democratically. Most often they are organized around 
military-style top-down chains of command. But there is often an in- 
teresting tension here, because top-down chains of command are not 
particularly efficient: they tend to promote stupidity among those on 
top, resentful foot-dragging among those on the bottom. The greater 
the need to improvise, the more democratic the cooperation tends to 
become. Inventors have always understood this, start-up capitalists fre- 
quently figure it out, and computer engineers have recently rediscov- 
ered the principle: not only with things like freeware, which everyone 
talks about, but even in the organization of their businesses. Apple 
Computers is a famous example: it was founded by (mostly Republi- 
can) computer engineers who broke from IBM in Silicon Valley in the 
1980s, forming little democratic circles of twenty to forty people with 
their laptops in each other's garages. 

This is presumably also why in the immediate wake of great di- 
sasters — a flood, a blackout, or an economic collapse — people tend 
to behave the same way, reverting to a rough-and-ready communism. 
However briefly, hierarchies and markets and the like become luxuries 
that no one can afford. Anyone who has lived through such a moment 
can speak to their peculiar qualities, the way that strangers become 
sisters and brothers and human society itself seems to be reborn. This 
is important, because it shows that we are not simply talking about 
cooperation. In fact, communism is the foundation of all human socia- 
bility. It is what makes society possible. There is always an assumption 
that anyone who is not actually an enemy can be expected on the prin- 
ciple of "from each according to their abilities," at least to an extent: 
for example, if one needs to figure out how to get somewhere, and the 
other knows the way. 

We so take this for granted, in fact, that the exceptions are them- 
selves revealing. E.E. Evans-Pritchard, an anthropologist who in the 
1920s carried out research among the Nuer, Nilotic pastoralists in 
southern Sudan, reports his discomfiture when he realized that some- 
one had intentionally given him wrong directions: 



On one occasion I asked the way to a certain place and was 
deliberately deceived. I returned in chagrin to camp and asked 
the people why they had told me the wrong way. One of them 
replied, "You are a foreigner, why should we tell you the right 
way? Even if a Nuer who was a stranger asked us the way we 
would say to him, 'You continue straight along that path,' but 
we would not tell him that the path forked. Why should we tell 
him? But you are now a member of our camp and you are kind 
to our children, so we will tell you the right way in future." 12 

The Nuer are constantly engaged in feuds; any stranger might well 
turn out to be an enemy there to scout out a good place for an am- 
bush, and it would be unwise to give such a person useful information. 
What's more, Evans-Pritchard's own situation was obviously relevant, 
since he was an agent of the British government — the same government 
that had recently sent in the RAF to strafe and bomb the inhabitants 
of this very settlement before forcibly resettling them there. Under 
the circumstances, the inhabitants' treatment of Evans-Pritchard seems 
quite generous. The main point, though, is that it requires something 
on this scale — an immediate threat to life and limb, terror-bombing of 
civilian populations — before people will ordinarily consider not giving 
a stranger accurate directions. '•' 

It's not just directions. Conversation is a domain particularly dis- 
posed to communism. Lies, insults, put-downs, and other sorts of ver- 
bal aggression are important — but they derive most of their power 
from the shared assumption that people do not ordinarily act this way: 
an insult does not sting unless one assumes that others will normally 
be considerate of one's feelings, and it's impossible to lie to someone 
who does not assume you would ordinarily tell the truth. When we 
genuinely wish to break off amicable relations with someone, we stop 
speaking to them entirely. 

The same goes for small courtesies like asking for a light, or even 
for a cigarette. It seems more legitimate to ask a stranger for a cigarette 
than for an equivalent amount of cash, or even food; in fact, if one has 
been identified as a fellow smoker, it's rather difficult to refuse such a 
request. In such cases — a match, a piece of information, holding the 
elevator — one might say the "from each" element is so minimal that 
most of us comply without even thinking about it. Conversely, the 
same is true if another person's need — even a stranger's — is particular- 
ly spectacular or extreme: if he is drowning, for example. If a child has 
fallen onto the subway tracks, we assume that anyone who is capable 
of helping her up will do so. 



I will call this "baseline communism": the understanding that, 
unless people consider themselves enemies, if the need is considered 
great enough, or the cost considered reasonable enough, the principle 
of "from each according to their abilities, to each according to their 
needs" will be assumed to apply. Of course, different communities ap- 
ply very different standards. In large, impersonal urban communities, 
such a standard may go no further than asking for a light or directions. 
This might not seem like much, but it founds the possibility of larger 
social relations. In smaller, less impersonal communities — especially 
those not divided into social classes — the same logic will likely extend 
much further: for example, it is often effectively impossible to refuse 
a request not just for tobacco, but for food — sometimes even from 
a stranger; certainly from anyone considered to belong to the com- 
munity. Exactly one page after describing his difficulties in asking for 
directions, Evans-Pritchard notes that these same Nuer find it almost 
impossible, when dealing with someone they have accepted as a mem- 
ber of their camp, to refuse a request for almost any item of common 
consumption, so that a man or woman known to have anything extra 
in the way of grain, tobacco, tools, or agricultural implements can be 
expected to see their stockpiles disappear almost immediately. 14 How- 
ever, this baseline of openhanded sharing and generosity never extends 
to everything. Often, in fact, things freely shared are treated as trivial 
and unimportant for that very reason. Among the Nuer, true wealth 
takes the form of cattle. No one would freely share their cattle; in fact, 
young Nuer men learn that they are expected to defend their cattle 
with their lives; for this reason, cattle are neither bought nor sold. 

The obligation to share food, and whatever else is considered a ba- 
sic necessity, tends to become the basis of everyday morality in a society 
whose members see themselves as equals. Another anthropologist, Au- 
drey Richards, once described how Bemba mothers, "such lax discipli- 
narians in everything else," will scold their children harshly if they give 
one an orange or some other treat and the child does not immediately 
offer to share it with her friends. 15 But sharing is also, in such societies — 
in any, if we really think about it — a major focus of life's pleasures. 
As a result, the need to share is particularly acute in both the best of 
times and the worst of times: during famines, for example, but also 
during moments of extreme plenty. Early missionary accounts of native 
North Americans almost invariably include awestruck remarks on gen- 
erosity in times of famine, often to total strangers. 16 At the same time, 

On returning from their fishing, their hunting, and their trading, 
they exchange many gifts; if they have thus obtained something 



unusually good, even if they have bought it, or if it has been 
given to them, they make a feast to the whole village with it. 
Their hospitality towards all sorts of strangers is remarkable. 17 

The more elaborate the feast, the more likely one is to see some 
combination of free sharing of some things (for instance, food and 
drink) and careful distribution of others: say, prize meat, whether from 
game or sacrifice, which is often parceled out according to very elabo- 
rate protocols or equally elaborate gift exchange. The giving and tak- 
ing of gifts often takes on a distinctly gamelike quality, continuous 
often with the actual games, contests, pageants, and performances that 
also often mark popular festivals. As with society at large, the shared 
conviviality could be seen as a kind of communistic base on top of 
which everything else is constructed. It also helps to emphasize that 
sharing is not simply about morality, but also about pleasure. Soli- 
tary pleasures will always exist, but for most human beings, the most 
pleasurable activities almost always involve sharing something: music, 
food, liquor, drugs, gossip, drama, beds. There is a certain communism 
of the senses at the root of most things we consider fun. 

The surest way to know that one is in the presence of commu- 
nistic relations is that not only are no accounts taken, but it would 
be considered offensive, or simply bizarre, to even consider doing so. 
Each village, clan, or nation within the League of the Hodenosaunee, 
or Iroquois, for example, was divided into two halves. 18 This is a com- 
mon pattern: in other parts of the world (Amazonia, Melanesia) too, 
there are arrangements in which members of one side can only marry 
someone from the other side, or only eat food grown on the other side; 
such rules are explicitly designed to make each side dependent on the 
other for some basic necessity of life. Among the Six Iroquois, each side 
was expected to bury the other's dead. Nothing would be more absurd 
than for one side to complain that, "last year, we buried five of your 
dead, but you only buried two of ours." 

Baseline communism might be considered the raw material of soci- 
ality, a recognition of our ultimate interdependence that is the ultimate 
substance of social peace. Still, in most circumstances, that minimal 
baseline is not enough. One always behaves in a spirit of solidarity 
more with some people than others, and certain institutions are spe- 
cifically based on principles of solidarity and mutual aid. First among 
these are those we love, with mothers being the paradigm of selfless 
love. Others include close relatives, wives and husbands, lovers, one's 
closest friends. These are the people with whom we share everything, 
or at least to whom we know we can turn in need, which is the 



definition of a true friend everywhere. Such friendships may be formal- 
ized by a ritual as "bond-friends" or "blood brothers" who cannot 
refuse each other anything. As a result, any community could be seen 
as criss-crossed with relations of "individualistic communism," one-to- 
one relations that operate, to varying intensities and degrees, on the 
basis of "from each according to their ability, to each according to 
their needs.'" 9 

This same logic can be, and is, extended within groups: not only 
cooperative work groups, but almost any in-group will define itself by 
creating its own sort of baseline communism. There will be certain 
things shared or made freely available within the group, others that 
anyone will be expected to provide for other members on request, that 
one would never share with or provide to outsiders: help in repair- 
ing one's nets in an association of fisherman, stationery supplies in 
an office, certain sorts of information among commodity traders, and 
so forth. Also, certain categories of people we can always call on in 
certain situations, such as harvesting or moving house. 20 One could go 
on from here to various forms of sharing, pooling, who gets to call on 
whom for help with certain tasks: moving, or harvesting, or even, if 
one is in trouble, providing an interest-free loan. Finally, there are the 
different sorts of "commons," the collective administration of common 

The sociology of everyday communism is a potentially enormous 
field, but one which, owing to our peculiar ideological blinkers, we 
have been unable to write about because we have been largely unable 
to see it. Rather than try to further outline it, I will limit myself to 
three final points. 

First, we are not really dealing with reciprocity here — or at best, 
only with reciprocity in the broadest sense. 21 What is equal on both 
sides is the knowledge that the other person would do the same for 
you, not that they necessarily will. The Iroquois example brings home 
clearly what makes this possible: that such relations are based on a 
presumption of eternity. Society will always exist. Therefore, there 
will always be a north and a south side of the village. This is why no 
accounts need be taken. In a similar way, people tend to treat their 
mothers and best friends as if they will always exist, however well they 
know it isn't true. 

The second point has to do with the famous "law of hospitality." 
There is a peculiar tension between a common stereotype of what are 
called "primitive societies" (people lacking both states and markets) 
as societies in which anyone not a member of the community is as- 
sumed to be an enemy, and the frequent accounts of early European 



travelers awestruck by the extraordinary generosity shown them by 
actual "savages." Granted, there is a certain truth to both sides. Wher- 
ever a stranger is a dangerous potential enemy, the normal way to 
overcome the danger is by some dramatic gesture of generosity whose 
very magnificence catapults them into that mutual sociality that is the 
ground for all peaceful social relations. True, when one is dealing with 
completely unknown quantities, there is often a process of testing. Both 
Christopher Columbus, in Hispaniola, and Captain Cook, in Polynesia, 
reported similar stories of islanders who either flee, attack, or offer 
everything — but who often later enter the boats and help themselves to 
anything they take a fancy to, provoking threats of violence from the 
crew, who then did their utmost to establish the principle that relations 
between strange peoples should be mediated instead by "normal" com- 
mercial exchange. 

It's understandable that dealings with potentially hostile strangers 
should encourage an all-or-nothing logic, a tension preserved even in 
English in the etymology of the words "host," "hostile," "hostage," 
and indeed "hospitality," all of which are derived from the same Latin 
root. 22 What I want to emphasize here is that all such gestures are 
simply exaggerated displays of that very "baseline communism" that I 
have already argued is the ground of all human social life. This is why, 
for instance, the difference between friends and enemies is so often 
articulated through food — and often the most commonplace, humble, 
domestic sorts of food: as in the familiar principle, common in both 
Europe and the Middle East, that those who have shared bread and 
salt must never harm one another. In fact, those things that exist above 
all to be shared often become those things one cannot share with en- 
emies. Among the Nuer, so free with food and everyday possessions, 
if one man murders another, a blood feud follows. Everyone in the 
vicinity will often have to line up on one side or another, and those on 
opposite sides are strictly forbidden to eat with anyone on the other, 
or even to drink from a cup or bowl one of their newfound enemies 
has previously used, lest terrible results ensue. 23 The extraordinary in- 
convenience this creates is a major incentive to try to negotiate some 
sort of settlement. By the same token, it is often said that people who 
have shared food, or the right, archetypal kind of food, are forbidden 
to harm one another, however much they might be otherwise inclined 
to do so. At times, this can take on an almost comical formality, as in 
the Arab story of the burglar who, while ransacking someone's house, 
stuck his finger in a jar to see if it was full of sugar, only to discover 
it was full of salt instead. Realizing that he had now eaten salt at the 
owner's table, he dutifully put back everything he'd stolen. 



Finally, once we start thinking of communism as a principle of 
morality rather than just a question of property ownership, it becomes 
clear that this sort of morality is almost always at play to some degree 
in any transaction — even commerce. If one is on sociable terms with 
someone, it's hard to completely ignore their situation. Merchants of- 
ten reduce prices for the needy. This is one of the main reasons why 
shopkeepers in poor neighborhoods are almost never of the same ethnic 
group as their customers; it would be almost impossible for a merchant 
who grew up in the neighborhood to make money, as they would be 
under constant pressure to give financial breaks, or at least easy credit 
terms, to their impoverished relatives and school chums. The opposite 
is true as well. An anthropologist who lived for some time in rural Java 
once told me that she measured her linguistic abilities by how well she 
could bargain at the local bazaar. It frustrated her that she could never 
get it down to a price as low as local people seemed pay. "Well," a Ja- 
vanese friend finally had to explain, "they charge rich Javanese people 
more, too." 

Once again, we are back to the principle that if the needs (for 
instance, dire poverty), or the abilities (for instance, wealth beyond 
imagination), are sufficiently dramatic, then unless there is a complete 
absence of sociality, some degree of communistic morality will almost 
inevitably enter into the way people take accounts. 24 A Turkish folktale 
about the Medieval Sufi mystic Nasruddin Hodja illustrates the com- 
plexities thus introduced into the very concept of supply and demand: 

One day when Nasruddin was left in charge of the local tea- 
house, the king and some retainers, who had been hunting 
nearby, stopped in for breakfast. 

"Do you have quail eggs?" asked the king. 

"I'm sure I can find some," answered Nasruddin. 

The king ordered an omelet of a dozen quail eggs, and 
Nasruddin hurried out to look for them. After the king and his 
party had eaten, he charged them a hundred gold pieces. 

The king was puzzled. "Are quail eggs really that rare in this 
part of the country?" 

"It's not so much quail eggs that are rare around here," 
Nasruddin replied. "It's more visits from kings." 


Communism, then, is based neither in exchange nor in reciprocity — 
except, as I have observed, in the sense that it does involve mutual ex- 
pectations and responsibilities. Even here, it seems better to use another 



word ("mutuality"?) so as to emphasize that exchange operates on 
entirely different principles; that it's a fundamentally different kind of 
moral logic. 

Exchange is all about equivalence. It's a back-and-forth process 
involving two sides in which each side gives as good as it gets. This 
is why one can speak of people exchanging words (if there's an argu- 
ment), blows, or even gunfire. 25 In these examples, it's not that there 
is ever an exact equivalence — even if there were some way to measure 
an exact equivalence — but more a constant process of interaction tend- 
ing toward equivalence. Actually, there's something of a paradox here: 
each side in each case is trying to outdo the other, but, unless one side 
is utterly put to rout, it's easiest to break the whole thing off when 
both consider the outcome to be more or less even. When we move to 
the exchange of material goods, we find a similar tension. Often there 
is an element of competition; if nothing else, there's always that pos- 
sibility. But at the same time, there's a sense that both sides are keeping 
accounts, and that, unlike what happens in communism, which always 
partakes of a certain notion of eternity, the entire relationship can be 
canceled out, and either party can call an end to it at any time. 

This element of competition can work in completely different 
ways. In cases of barter or commercial exchange, when both parties to 
the transaction are only interested in the value of goods being trans- 
acted, they may well — as economists insist they should — try to seek the 
maximum material advantage. On the other hand, as anthropologists 
have long pointed out, when the exchange is of gifts, that is, the objects 
passing back and forth are mainly considered interesting in how they 
reflect on and rearrange relations between the people carrying out the 
transaction, then insofar as competition enters in, it is likely to work 
precisely the other way around — to become a matter of contests of 
generosity, of people showing off who can give more away. 

Let me take these one at a time. 

What marks commercial exchange is that it's "impersonal": who it 
is that is selling something to us, or buying something from us, should 
in principle be entirely irrelevant. We are simply comparing the value 
or two objects. True, as with any principle, in practice, this is rarely 
completely true. There has to be some minimal element of trust for a 
transaction to be carried out at all, and, unless one is dealing with a 
vending machine, that usually requires some outward display of social- 
ity. Even in the most impersonal shopping mall or supermarket, clerks 
are expected to at least simulate personal warmth, patience, and other 
reassuring qualities; in a Middle-Eastern bazaar, one might have to go 
through an elaborate process of establishing a simulated friendship, 
sharing tea, food, or tobacco, before engaging in similarly elaborate 



haggling — an interesting ritual that begins by establishing sociality 
through baseline communism — and continues with an often prolonged 
mock battle over prices. It's all done on the basis of the assumption 
that buyer and seller are, at least at that moment, friends (and thus 
each entitled to feel outraged and indignant at the other's unreasonable 
demands), but it's all a little piece of theater. Once the object changes 
hands, there is no expectation that the two will ever have anything to 
do with each other again. 26 

Most often this sort of haggling — in Madagascar the term for it 
literally means "to battle out a sale" {miady varotra) — can be a source 
of pleasure in itself. 

The first time I visited Analakely, the great cloth market in Mada- 
gascar's capital, I came with a Malagasy friend intent on buying a 
sweater. The whole process took about four hours. It went something 
like this: my friend would spot a likely sweater hanging in some booth, 
ask the price, and then she would begin a prolonged battle of wits with 
the vendor, invariably involving dramatic displays of insult and indig- 
nation, and simulated walkings off in disgust. Often it seemed ninety 
percent of the argument was spent on a final, tiny difference of a few 
ariary — literally, pennies — that seemed to become a profound matter of 
principle on either side, since a merchant's failure to concede it could 
sink the entire deal. 

The second time I visited Analakely I went with another friend, 
also a young woman, who had a list of measures of cloth to buy sup- 
plied by her sister. At each booth she adopted the same procedure: she 
simply walked up and asked for the price. 

The man would quote her one. 

"All right," she then asked, "and what's your real final price?" 
He'd tell her, and she'd hand over the money. 
"Wait a minute!" I asked. "You can do that? 
"Sure," she said. "Why not?" 

I explained what had happened with my last friend. 

"Oh, yeah," she said. "Some people enjoy that sort of thing." 

Exchange allows us to cancel out our debts. It gives us a way to 
call it even: hence, to end the relationship. With vendors, one is usu- 
ally only pretending to have a relationship at all. With neighbors, 
one might for this very reason prefer not to pay one's debts. Laura 
Bohannan writes about arriving in a Tiv community in rural Nigeria; 
neighbors immediately began arriving bearing little gifts: "two ears 
corn, one vegetable marrow, one chicken, five tomatoes, one handful 
peanuts." 27 Having no idea what was expected of her, she thanked 
them and wrote down in a notebook their names and what they had 



brought. Eventually, two women adopted her and explained that all 
such gifts did have to be returned. It would be entirely inappropriate 
to simply accept three eggs from a neighbor and never bring anything 
back. One did not have to bring back eggs, but one should bring some- 
thing back of approximately the same value. One could even bring 
money — there was nothing inappropriate in that — provided one did 
so at a discreet interval, and above all, that one did not bring the 
exact cost of the eggs. It had to be either a bit more or a bit less. To 
bring back nothing at all would be to cast oneself as an exploiter or a 
parasite. To bring back an exact equivalent would be to suggest that 
one no longer wishes to have anything to do with the neighbor. Tiv 
women, she learned, might spend a good part of the day walking for 
miles to distant homesteads to return a handful of okra or a tiny bit of 
change, "in an endless circle of gifts to which no one ever handed over 
the precise value of the object last received" — and in doing so, they 
were continually creating their society. There was certainly a trace of 
communism here — neighbors on good terms could also be trusted to 
help each other out in emergencies — but unlike communistic relations, 
which are assumed to be permanent, this sort of neighborliness had to 
be constantly created and maintained, because any link can be broken 
off at any time. 

There are endless variations on this sort of tit-for-tat, or almost 
tit-for-tat, gift exchange. The most familiar is the exchange of presents: 
I buy someone a beer; they buy me the next one. Perfect equivalence 
implies equality. But consider a slightly more complicated example: I 
take a friend out to a fancy restaurant for dinner; after a discreet inter- 
val, they do the same. As anthropologists have long been in the habit of 
pointing out, the very existence of such customs — especially, the feeling 
that one really ought to return the favor — can't be explained by stan- 
dard economic theory, which assumes that any human interaction is 
ultimately a business deal and that we are all self-interested individuals 
trying to get the most for ourselves for the least cost or least amount 
of effort. 28 But this feeling is quite real, and it can cause genuine strain 
for those of limited means trying to keep up appearances. So: Why, 
if I took a free-market economic theorist out to an expensive dinner, 
would that economist feel somewhat diminished — uncomfortably in 
my debt — until he had been able to return the favor? Why, if he were 
feeling competitive with me, would he be inclined to take me to some- 
place even more expensive? 

Recall the feasts and festivals alluded to above: here, too, there is a 
base of conviviality and playful (sometimes not so playful) competition. 
On the one hand, everyone's pleasure is enhanced — after all, how many 



people would really want to eat a superb meal at a French restau- 
rant all alone? On the other, things can easily slip into games of one- 
upmanship — and hence obsession, humiliation, rage . . . or, as we'll 
soon see, even worse. In some societies, these games are formalized, 
but it's important to stress that such games only really develop between 
people or groups who perceive themselves to be more or less equivalent 
in status. 29 To return to our imaginary economist: it's not clear that 
he would feel diminished if he received a present, or was taken out to 
dinner, by just anyone. He would be most likely to feel this way if the 
benefactor were someone he felt was of roughly equivalent status or 
dignity: a colleague, for example. If Bill Gates or George Soros took 
him out to dinner, he would likely conclude that he had indeed re- 
ceived something for nothing and leave it at that. If some ingratiating 
junior colleague or eager graduate student did the same, he'd be likely 
to conclude that he was doing the man a favor just by accepting the 
invitation — if indeed he did accept, which he probably wouldn't. 

This, too, appears to be the case wherever we find society divided 
into fine gradations of status and dignity. Pierre Bourdieu has described 
the "dialectic of challenge and riposte" that governs all games of honor 
among Kabyle Berber men in Algeria, in which the exchange of insults, 
attacks (in feud or battles), thefts, or threats was seen to follow exactly 
the same logic as the exchange of gifts. 30 To give a gift is both an honor 
and a provocation. To respond to one requires infinite artistry. Timing 
is all-important. So is making the counter-gift just different enough, but 
also just slightly grander. Above all is the tacit moral principle that one 
must always pick on someone one's own size. To challenge someone 
obviously older, richer, and more honorable is to risk being snubbed, 
and hence humiliated; to overwhelm a poor but respectable man with 
a gift he couldn't possibly pay back is simply cruel, and will do equal 
damage to your reputation. There's an Indonesian story about that too: 
about a rich man who sacrificed a magnificent ox to shame a penurious 
rival; the poor man utterly humiliated him, and won the contest, by 
calmly proceeding to sacrifice a chicken. 31 

Games like this become especially elaborate when status is to some 
degree up for grabs. When matters are too clear-cut, that introduces 
its own sorts of problems. Giving gifts to kings is often a particularly 
tricky and complicated business. The problem here is that one cannot 
really give a gift fit for a king (unless, perhaps, one is another king), 
since kings by definition already have everything. On the one hand, one 
is expected to make a reasonable effort: 



Nasruddin was once called up to visit the king. A neighbor saw 
him hurrying along the road carrying a bag of turnips. 
"What are those for?" he asked. 

"I've been called to see the king. I thought it would be best 
to bring some kind of present." 

"You're bringing him turnips? But turnips are peasant food! 
He's a king! You should bring him something more appropri- 
ate, like grapes." 

Nasruddin agreed, and came to the king carrying a bunch of 
grapes. The king was not amused. "You're giving me grapes? 
But I'm a king! This is ridiculous. Take this idiot out and teach 
him some manners! Throw each and every one of the grapes at 
him and then kick him out of the palace." 

The emperor's guards dragged Nasruddin into a side room 
and began pelting him with grapes. As they did so, he fell on 
his knees and began crying, "Thank you, thank you God, for 
your infinite mercy!" 

"Why are you thanking God?" they asked. "You're being 
totally humiliated!" 

Nasruddin replied, "Oh, I was just thinking, 'Thank God I 
didn't bring the turnips!'" 

On the other hand, to give something that a king does not already 
have can get you in even greater trouble. One story circulating in the 
early Roman Empire concerned an inventor who, with great fanfare, 
presented a glass bowl as a gift to the emperor Tiberius. The emperor 
was puzzled: What was so impressive about a piece of glass? The man 
dropped it on the ground. Rather than shattering, it merely dented. He 
picked it up and simply pushed it back into its former shape. 

"Did you tell anyone else how you made this thing?" asked a 
startled Tiberius. 

The inventor assured him that he had not. The emperor therefore 
ordered him killed, since, if word of how to make unbreakable glass 
got out, his treasury of gold and silver would soon be worthless. 32 

The best bet when dealing with kings was to make a reason- 
able effort to play the game, but one that is still bound to fail. The 
fourteenth-century Arab traveler Ibn Battuta tells of the customs of 
the King of Sind, a terrifying monarch who took a particular delight 
in displays of arbitrary power. 33 It was customary for foreign worthies 
visiting the king to present him with magnificent presents; whatever 
the gift was, he would invariably respond by presenting the bearer 
with something many times its value. As a result, a substantial business 



developed where local bankers would lend money to such visitors to 
finance particularly spectacular gifts, knowing they could be well re- 
paid from the proceeds of royal one-upmanship. The king must have 
known about this. He didn't object — since the whole point was to 
show that his wealth exceeded all possible equivalence — and if he re- 
ally needed to, he could always expropriate the bankers. They knew 
that the really important game was not economic, but one of status, 
and his was absolute. 

In exchange, the objects being traded are seen as equivalent. There- 
fore, by implication, so are the people: at least, at the moment when 
gift is met with counter-gift, or money changes hands; when there is 
no further debt or obligation and each of the two parties is equally 
free to walk away. This in turn implies autonomy. Both principles sit 
uncomfortably with monarchs, which is the reason that kings generally 
dislike any sort of exchange. 34 But within that overhanging prospect of 
potential cancellation, of ultimate equivalence, we find endless varia- 
tions, endless games one can play. One can demand something from 
another person, knowing that by doing so, one is giving the other the 
right to demand something of equivalent value in return. In some con- 
texts, even praising another's possession might be interpreted as a de- 
mand of this sort. In eighteenth-century New Zealand, English settlers 
soon learned that it was not a good idea to admire, say, a particularly 
beautiful jade pendant worn around the neck of a Maori warrior; the 
latter would inevitably insist on giving it, not take no for an answer, 
and then, after a discreet interval, return to praise the settler's coat 
or gun. The only way to head this off was to quickly give him a gift 
before he could ask for one. Sometimes gifts are offered in order for 
the giver to be able to make such a demand: if one accepts the present, 
one is tacitly agreeing to allow the giver to claim whatever he deems 

All this, in turn, can shade into something very much like barter, 
directly swapping one thing for another — which as we've seen does 
occur even in what Marcel Mauss liked to refer to as "gift econo- 
mies," even if largely between strangers. 16 Within communities, there 
is almost always a reluctance, as the Tiv example so nicely illustrates, 
to allow things to cancel out — one reason that if there is money in 
common usage, people will often either refuse to use it with friends or 
relatives (which in a village society includes pretty much everyone), or 
alternately, like the Malagasy villagers in chapter 3, use it in radically 
different ways. 




Exchange, then, implies formal equality — or at least, the potential for 
it. This is precisely why kings have such trouble with it. 

In contrast, relations of explicit hierarchy — that is, relations be- 
tween at least two parties in which one is considered superior to the 
other — do not tend to operate by reciprocity at all. It's hard to see 
because the relation is often justified in reciprocal terms ("the peas- 
ants provide food, the lords provide protection"), but the principle by 
which they operate is exactly the opposite. In practice, hierarchy tends 
to work by a logic of precedent. 

To illustrate what I mean by this, let us imagine a kind of con- 
tinuum of one-sided social relations, ranging from the most exploit- 
ative to the most benevolent. At one extreme is theft, or plunder; on 
the other selfless charity. 37 Only at these two extremes is it is possible 
to have material interactions between people who otherwise have no 
social relation of any kind. Only a lunatic would mug his next-door 
neighbor. A band of marauding soldiers or nomadic horsemen falling 
on a peasant hamlet to rape and pillage also obviously have no inten- 
tion of forming any ongoing relations with the survivors. But in a 
similar way, religious traditions often insist that the only true charity is 
anonymous — in other words, not meant to place the recipient in one's 
debt. One extreme form of this, documented in various parts of the 
world, is the gift by stealth, in a kind of reverse burglary: to literally 
sneak into the recipient's house at night and plant one's present so no 
one can know for sure who has left it. The figure of Santa Claus, or 
Saint Nicholas (who, it must be remembered, was not just the patron 
saint of children, but also the patron saint of thieves) would appear to 
be the mythological version of the same principle: a benevolent burglar 
with whom no social relations are possible and therefore to whom no 
one could possibly owe anything, in his case, above all, because he does 
not actually exist. 

Observe, however, what happens when one moves just a little bit 
less far out on the continuum in either direction. I have been told (I 
suspect it isn't true) that in parts of Belarus, gangs prey so systemati- 
cally on travelers on trains and busses that they have developed the 
habit of giving each victim a little token, to confirm that the bearer has 
already been robbed. Obviously one step toward the creation of a state. 
Actually, one popular theory of the origins of the state, that goes back 
at least to the fourteenth-century North African historian Ibn Khaldun, 
runs precisely along these lines: nomadic raiders eventually systematize 



their relations with sedentary villagers; pillage turns into tribute, rape 
turns into the "right of the first night" or the carrying off of likely can- 
didates as recruits for the royal harem. Conquest, untrammeled force, 
becomes systematized, and thus framed not as a predatory relation but 
as a moral one, with the lords providing protection, and the villagers, 
their sustenance. But even if all parties assume they are operating by a 
shared moral code, that even kings cannot do whatever they want but 
must operate within limits, allowing peasants to argue about the rights 
and wrongs of just how much of their harvest a king's retainers are 
entitled to carry off, they are very unlikely to frame their calculation in 
terms of the quality or quantity of protection provided, but rather in 
terms of custom and precedent: How much did we pay last year? How 
much did our ancestors have to pay? The same is true on the other 
side. If charitable donations become the basis for any sort of social 
relation, it will not be one based on reciprocity. If you give some coins 
to a panhandler, and that panhandler recognizes you later, it is unlikely 
that he will give you any money — but he might well consider you more 
likely to give him money again. Certainly this is true if one donates 
money to a charitable organization. (I gave money to the United Farm 
Workers once and I still haven't heard the end of it.) Such an act of 
one-sided generosity is treated as a precedent for what will be expected 
afterward. 38 It's quite the same if one gives candy to a child. 

This is what I mean when I say that hierarchy operates by a prin- 
ciple that is the very opposite of reciprocity. Whenever the lines of su- 
periority and inferiority are clearly drawn and accepted by all parties as 
the framework of a relationship, and relations are sufficiently ongoing 
that we are no longer simply dealing with arbitrary force, then relations 
will be seen as being regulated by a web of habit or custom. Sometimes 
the situation is assumed to have originated in some founding act of 
conquest. Or it might been seen as ancestral custom for which there is 
no need of explanation. But this introduces another complication to the 
problem of giving gifts to kings — or to any superior: there is always the 
danger that it will be treated as a precedent, added to the web of cus- 
tom, and therefore considered obligatory thereafter. Xenophon claims 
that in the early days of the Persian Empire, each province vied to send 
the Great King gifts of its most unique and valuable products. This 
became the basis of the tribute system: each province was eventually 
expected to provide the same "gifts" every year." Similarly, according 
to the great Medieval historian Marc Bloch: 

[I]n the ninth century, when one day there was a shortage of 
wine in the royal cellars at Ver, the monks of Saint-Denis were 



asked to supply the two hundred hogs-heads required. This 
contribution was thenceforth claimed from them as of right 
every year, and it required an imperial charter to abolish it. At 
Ardres, we are told, there was once a bear, the property of the 
local lord. The inhabitants, who loved to watch it fight with 
dogs, undertook to feed it. The beast eventually died, but the 
lord continued to exact the loaves of bread." 40 

In other words, any gift to a feudal superior, "especially if repeated 
three of four times," was likely to be treated as a precedent and added 
to the web of custom. As a result, those giving gifts to superiors often 
insisted on receiving a "letter of non-prejudice" legally stipulating that 
such a gift would not be required in the future. While it is unusual for 
matters to become quite so formalized, any social relation that is as- 
sumed from the start to be unequal will inevitably begin to operate on 
an analogous logic — if only because, once relations are seen as based 
on "custom," the only way to demonstrate that one has a duty or obli- 
gation to do something is to show that one has done it before. 

Often, such arrangements can turn into a logic of caste: certain 
clans are responsible for weaving the ceremonial garments, or bringing 
the fish for royal feasts, or cutting the king's hair. They thus come to 
be known as weavers or fishermen or barbers. 41 This last point can't be 
overemphasized because it brings home another truth regularly over- 
looked: that the logic of identity is, always and everywhere, entangled 
in the logic of hierarchy. It is only when certain people are placed 
above others, or where everyone is being ranked in relation to the 
king, or the high priest, or Founding Fathers, that one begins to speak 
of people bound by their essential nature: about fundamentally differ- 
ent kinds of human being. Ideologies of caste or race are just extreme 
examples. It happens whenever one group is seen as raising themselves 
above others, or placing themselves below others, in such a way that 
ordinary standards of fair dealing no longer apply. 

In fact, something like this happens in a small way even in our 
most intimate social relations. The moment we recognize someone as a 
different sort of person, either above or below us, then ordinary rules 
of reciprocity become modified or are set aside. If a friend is unusually 
generous once, we will likely wish to reciprocate. If she acts this way 
repeatedly, we conclude she is a generous person, and are hence less 
likely to reciprocate. 42 

We can describe a simple formula here: a certain action, repeated, 
becomes customary; as a result, it comes to define the actor's essential 
nature. Alternately, a person's nature may be defined by how others 



have acted toward him in the past. To be an aristocrat is largely to 
insist that in the past, others have treated you as an aristocrat (since 
aristocrats don't really do anything in particular, most spend their time 
simply existing in some sort of putatively superior state), and therefore 
should continue to do so. Much of the art of being such a person is that 
of treating oneself in such a manner that it conveys how you expect 
others to treat you: in the case of actual kings, covering oneself with 
gold so as to suggest that others do likewise. On the other end of the 
scale, this is also how abuse becomes self-legitimating. As a former 
student of mine, Sarah Stillman, pointed out: in the United States, if 
a middle-class thirteen-year-old girl is kidnapped, raped, and killed, 
it is considered an agonizing national crisis that everyone with a tele- 
vision is expected to follow for several weeks. If a thirteen-year-old 
girl is turned out as a child prostitute, raped systematically for years, 
and ultimately killed, all this is considered unremarkable — really just 
the sort of thing one can expect to end up happening to someone 
like that. 43 

When objects of material wealth pass back and forth between su- 
periors and inferiors as gifts or payments, the key principle seems to 
be that the sorts of things given on each side should be considered 
fundamentally different in quality, their relative value impossible to 
quantify — the result being that there is no way to even conceive of a 
squaring of accounts. Even if Medieval writers insisted on imagining 
society as a hierarchy in which priests pray for everyone, nobles fight 
for everyone, and peasants feed everyone, it never even occurred to 
anyone to establish how many prayers or how much military protec- 
tion was equivalent to a ton of wheat. Nor did anyone ever consider 
making such a calculation. Neither is it that "lowly" sorts of people are 
necessarily given lowly sorts of things and vice versa. Sometimes it is 
quite the opposite. Until recently, just about any notable philosopher, 
artist, poet, or musician was required to find a wealthy patron for 
support. Famous works of poetry or philosophy are often prefaced — 
oddly, to the modern eye — with gushing, sycophantic praise for the 
wisdom and virtue of some long-forgotten earl or count who provided 
a meager stipend. The fact that the noble patron merely provided 
room and board, or money, and that the client showed his gratitude 
by painting the Mona Lisa, or composing the Toccata and Fugue in 
D Minor, was in no way seen to compromise the assumption of the 
noble's intrinsic superiority. 

There is one great exception to this principle, and that is the phe- 
nomenon of hierarchical redistribution. Here, though, rather than giv- 
ing back and forth the same sorts of things, they give back and forth 



exactly the same thing: as, for instance, when fans of certain Nigerian 
pop stars throw money onto the stage during concerts, and the pop 
stars in question make occasional tours of their fans' neighborhoods 
tossing (the same) money from the windows of their limos. When this 
is all that's going on, we may speak of an absolutely minimal sort of 
hierarchy. In much of Papua New Guinea, social life centers on "big 
men," charismatic individuals who spend much of their time coaxing, 
cajoling, and manipulating in order to acquire masses of wealth to give 
away again at some great feast. One could, in practice, pass from here 
to, say, an Amazonian or indigenous North American chief. Unlike 
big men, their role is more formalized; but actually such chiefs have 
no power to compel anyone to do anything they don't want to (hence 
North American Indian chiefs' famous skill at oratory and powers of 
persuasion). As a result, they tended to give away far more than they 
received. Observers often remarked that in terms of personal posses- 
sions, a village chief was often the poorest man in the village, such was 
the pressure on him for constant supply of largesse. 

Indeed, one could judge how egalitarian a society really was by ex- 
actly this: whether those ostensibly in positions of authority are merely 
conduits for redistribution, or able to use their positions to accumulate 
riches. The latter seems most likely in aristocratic societies that add 
another element: war and plunder. After all, just about anyone who 
comes into a very large amount of wealth will ultimately give at least 
part of it away — often in grandiose and spectacular ways to large num- 
bers of people. The more of one's wealth is obtained by plunder or 
extortion, the more spectacular and self-aggrandizing will be the forms 
in which it's given away. 44 And what is true of warrior aristocracies 
is all the more true of ancient states, where rulers almost invariably 
represented themselves as the protectors of the helpless, supporters of 
widows and orphans, and champions of the poor. The genealogy of 
the modern redistributive state — with its notorious tendency to foster 
identity politics — can be traced back not to any sort of "primitive com- 
munism" but ultimately to violence and war. 

Shifting between Modalities 

I should underline again that we are not talking about different types 
of society here (as we've seen, the very idea that we've ever been or- 
ganized into discrete "societies" is dubious) but moral principles that 
always coexist everywhere. We are all communists with 'our closest 



friends, and feudal lords when dealing with small children. It is very 
hard to imagine a society where people wouldn't be both. 

The obvious question is: If we are all ordinarily moving back and 
forth between completely different systems of moral accounting, why 
hasn't anybody noticed this? Why, instead, do we continually feel the 
need to reframe everything in terms of reciprocity? 

Here we must return to the fact that reciprocity is our main way of 
imagining justice. In particular, it is what we fall back on when we're 
thinking in the abstract, and especially when we're trying to create an 
idealized picture of society. I've already given examples of this sort of 
thing. Iroquois communities were based on an ethos that required ev- 
eryone to be attentive to the needs of several different sorts of people: 
their friends, their families, members of their matrilineal clans, even 
friendly strangers in situations of hardship. It was when they had to 
think about society in the abstract that they started to emphasize the 
two sides of the village, each of which had to bury the other's dead. 
It was a way of imagining communism through reciprocity. Similarly, 
feudalism was a notoriously messy and complicated business, but when- 
ever Medieval thinkers generalized about it, they reduced all its ranks 
and orders into one simple formula in which each order contributed its 
share: "Some pray, some fight, still others work." 45 Even hierarchy was 
seen as ultimately reciprocal, despite this formula having nothing to 
do with the real relations between priests, knights, and peasants really 
operated on the ground. Anthropologists are familiar with the phe- 
nomenon: it's only when people who have never had occasion to really 
think about their society or culture as a whole, who probably weren't 
even aware they were living inside something other people considered 
a "society" or a "culture," are asked to explain how everything works 
that they say things like "this is how we repay our mothers for the pain 
of having raised us," or puzzle over conceptual diagrams in which clan 
A gives their women in marriage to clan B who gives theirs to clan C, 
who gives theirs back to A again, but which never seem to quite cor- 
respond to what real people actually do. 46 When trying to imagine a 
just society, it's hard not to evoke images of balance and symmetry, of 
elegant geometries where everything balances out. 

The idea that there is something called "the market" is not so very 
different. Economists will often admit this, if you ask them in the right 
way. Markets aren't real. They are mathematical models, created by 
imagining a self-contained world where everyone has exactly the same 
motivation and the same knowledge and is engaging in the same self- 
interested calculating exchange. Economists are aware that reality is 
always more complicated; but they are also aware that to come up with 



a mathematical model, one always has to make the world into a bit of 
a cartoon. There's nothing wrong with this. The problem comes when 
it enables some (often these same economists) to declare that anyone 
who ignores the dictates of the market shall surely be punished — or 
that since we live in a market system, everything (except government 
interference) is based on principles of justice: that our economic system 
is one vast network of reciprocal relations in which, in the end, the 
accounts balance and all debts are paid. 

These principles get tangled up in each other and it's thus often 
difficult to tell which predominates in a given situation — one reason 
that it's ridiculous to pretend we could ever reduce human behavior, 
economic or otherwise, to a mathematical formula of any sort. Still, 
this means that some degree of reciprocity can be detected as poten- 
tially present in any situation; so a determined observer can always find 
some excuse to say it's there. What's more, certain principles appear 
to have an inherent tendency to slip into others. For instance, a lot of 
extremely hierarchical relationships can operate (at least some of the 
time) on communistic principles. If you have a rich patron, you come 
to him in times of need, and he is expected to help you. But only to a 
certain degree. No one expects the patron to provide so much help that 
it threatens to undermine the underlying inequality. 47 

Likewise, communistic relations can easily start slipping into rela- 
tions of hierarchical inequality — often without anyone noticing it. It's 
not hard to see why this happens. Sometimes different people's "abili- 
ties" and "needs" are grossly disproportionate. Genuinely egalitarian 
societies are keenly aware of this and tend to develop elaborate safe- 
guards around the dangers of anyone — say, especially good hunters, in 
a hunting society — rising too far above themselves; just as they tend 
to be suspicious of anything that might make one member of the so- 
ciety feel in genuine debt to another. A member who draws attention 
to his own accomplishments will find himself the object of mockery. 
Often, the only polite thing to do if one has accomplished something 
significant is to instead make fun of oneself. The Danish writer Peter 
Freuchen, in his Book of the Eskimo, described how in Greenland, one 
could tell what a fine delicacy someone had to offer his guests by how 
much he belittled it beforehand: 

The old man laughed. "Some people don't know much. I am 
such a poor hunter and my wife a terrible cook who ruins 
everything. I don't have much, but I think there is a piece of 
meat outside. It might still be there as the dogs have refused it 
several times." 



This was such a recommendation in the Eskimo way of 
backwards bragging that everyone's mouths began to water . . . 

The reader will recall the walrus hunter of the last chapter, who 
took offense when the author tried to thank him for giving him a share 
of meat — after all, humans help one another, and once we treat some- 
thing as a gift, we turn into something less than human: "Up here we 
say that by gifts one makes slaves and by whips one makes dogs." 48 

"Gift" here does not mean something given freely, not mutual aid 
that we can ordinarily expect human beings to provide to one another. 
To thank someone suggests that he or she might not have acted that 
way, and that therefore the choice to act this way creates an obliga- 
tion, a sense of debt — and hence, inferiority. Communes or egalitarian 
collectives in the United States often face similar dilemmas, and they 
have to come up with their own safeguards against creeping hierar- 
chy. It's not that the tendency for communism to slip into hierarchy 
is inevitable — societies like the Inuit have managed to fend it off for 
thousands of years — but rather, that one must always guard against it. 

In contrast, it's notoriously difficult — often downright impossible — 
to shift relations based on an assumption of communistic sharing to 
relations of equal exchange. We observe this all the time with friends: if 
someone is seen as taking advantage of your generosity, it's often much 
easier to break off relations entirely than to demand that they some- 
how pay you back. One extreme example is the Maori story about a 
notorious glutton who used to irritate fishermen up and down the coast 
near where he lived by constantly asking for the best portions of their 
catch. Since to refuse a direct request for food was effectively impos- 
sible, they would dutifully turn it over; until one day, people decided 
enough was enough and killed him. 49 

We've already seen how creating a ground of sociability among 
strangers can often require an elaborate process of testing the oth- 
ers' limits by helping oneself to their possessions. The same sort of 
thing can happen in peacemaking, or even in the creation of business 
partnerships. 50 In Madagascar, people told me that two men who are 
thinking of going into business together will often become blood broth- 
ers. Blood brotherhood, fatidra, consists of an unlimited promise of 
mutual aid. Both parties solemnly swear that they will never refuse any 
request from the other. In reality, partners to such an agreement are 
usually fairly circumspect in what they actually request. But, my friends 
insisted, when people first make such an agreement, they sometimes 
like to test it out. One may demand the other's house, the shirt off 
his back, or (everyone's favorite example) the right to spend the night 



with his wife. The only limit is the knowledge that anything one can 
demand, the other one can too. 51 Here, again, we are talking about an 
initial establishment of trust. Once the genuineness of the mutual com- 
mitment has been confirmed, the ground is prepared, as it were, and 
the two men can begin to buy and sell on consignment, advance funds, 
share profits, and otherwise trust that each will look after the other's 
commercial interests from then on. The most famous and dramatic 
moments, however, are those when relations of exchange threaten to 
break down into hierarchy: that is, when two parties are acting like 
equals, trading gifts, or blows, or commodities, or anything else, but 
one of them does something that completely flips the scale. 

I've already mentioned the tendency of gift exchange to turn into 
games of one-upmanship, and how in some societies this potential is 
formalized in great public contests. This is typical, above all, of what 
are often called "heroic societies": those in which governments are 
weak or nonexistent and society is organized instead around warrior 
noblemen, each with his entourage of loyal retainers and tied to the 
others by ever-shifting alliances and rivalries. Most epic poetry — from 
the Iliad to the Mahabharata to Beowulf — harkens back to this sort 
of world, and anthropologists have discovered similar arrangements 
among the Maori of New Zealand and the Kwakiutl, Tlingit, and 
Haida of the American Northwest coast. In heroic societies, the throw- 
ing of feasts and resulting contests of generosity are often spoken of 
as mere extensions of war: "fighting with property" or "fighting with 
food." Those who throw such feasts often indulge in colorful speeches 
about how their enemies are thus crushed and destroyed by glorious 
feats of generosity aimed in their direction (Kwakiutl chiefs liked to 
speak of themselves as great mountains from which gifts rolled like gi- 
ant boulders), and of how conquered rivals are thus reduced — much as 
in the Inuit metaphor — to slaves. 

Such statements are not to be taken literally — another feature of 
such societies is a highly developed art of boasting. 52 Heroic chiefs and 
warriors tended to talk themselves up just as consistently as those in 
egalitarian societies talked themselves down. It's not as if someone who 
loses out in a contest of gift exchange is ever actually reduced to slav- 
ery, but he might end up feeling as if he were. And the consequences 
could be catastrophic. One ancient Greek source describes Celtic fes- 
tivals where rival nobles would alternate between jousts and contests 
of generosity, presenting their enemies with magnificent gold and silver 
treasures. Occasionally this could lead to a kind of checkmate; some- 
one would be faced with a present so magnificent that he could not 
possibly match it. In this case, the only honorable response was for him 



to cut his own throat, thus allowing his wealth to be distributed to his 
followers. 53 Six hundred years later, we find a case from an Icelandic 
saga of an aging Viking named Egil, who befriended a younger man 
named Einar, who was still actively raiding. They liked to sit together 
composing poetry. One day Einar came by a magnificent shield "in- 
scribed with old tales; and between the writing were overlaid spangles 
of gold with precious stones." No one had ever seen anything like it. 
He took it with him on a visit to Egil. Egil was not at home, so Einar 
waited three days, as was the custom, then hung the shield as a present 
in the mead-hall and rode off. 

Egil returned home, saw the shield, and asked who owned 
such a treasure. He was told that Einar had visited and given 
it to him. Then Egil said, "To hell with him! Does he think 
I'm going to stay up all night and compose a poem about his 
shield? Get my horse, I'm going to ride after him and kill him." 
As Einar's luck would have it he had left early enough to put 
sufficient distance between himself and Egil. So Egil resigned 
himself to composing a poem about Einar's gift. 14 

Competitive gift exchange, then, does not literally render anyone slaves; 
it is simply an affair of honor. These are people, however, for whom 
honor is everything. 

The main reason that being unable to pay a debt, especially a debt 
of honor, was such a crisis was because this was how noblemen as- 
sembled their entourages. The law of hospitality in the ancient world, 
for instance, insisted that any traveler must be fed, given shelter, and 
treated as an honored guest — but only for a certain length of time. 
If a guest did not go away, he would eventually become a mere sub- 
ordinate. The role of such hangers-on has been largely neglected by 
students of human history. In many periods — from imperial Rome to 
medieval China — probably the most important relationships, at least in 
towns and cities, were those of patronage. Anyone rich and important 
would find himself surrounded by flunkies, sycophants, perpetual din- 
ner guests, and other sorts of willing dependents. Drama and poetry 
of the time are full of such characters." Similarly, for much of hu- 
man history, being respectable and middle-class meant spending one's 
mornings going from door to door, paying one's respects to important 
local patrons. To this day, informal patronage systems still crop up, 
whenever relatively rich and powerful people feel the need to assemble 



networks of supporters — a practice well documented in many parts 
of the Mediterranean, the Middle East, and Latin America. Such rela- 
tionships seem to consist of a slapdash mix of all three principles that 
I've been mapping out over the course of this chapter; nevertheless, 
those observing them insist on trying to cast them in the language of 
exchange and debt. 

A final example: in a collection called Gifts and Spoils, published in 
1971, we find a brief essay by the anthropologist Lorraine Blaxter about 
a rural department in the French Pyrenees, most of whose inhabitants 
are farmers. Everyone places a great emphasis on the importance of 
mutual aid — the local phrase means "giving service" {rendre service). 
People living in the same community should look out for one another 
and pitch in when their neighbors are having trouble. This is the es- 
sence of communal morality, in fact, it's how one knows that any sort 
of community exists. So far so good. However, she notes, when some- 
one does a particularly great favor, mutual aid can turn into something 

If a man in a factory went to the boss and asked for a job, and 
the boss found him one, this would be an example of someone 
giving service. The man who got the job could never repay the 
boss, but he could show him respect, or perhaps give him sym- 
bolic gifts of garden produce. If a gift demands a return, and 
no tangible return is possible, the repayment will be through 
support or esteem. 56 

Thus does mutual aid slip into inequality. Thus do patron-client 
relations come into being. We have already observed this. I chose this 
particular passage because the author's phrasing is so weird. It com- 
pletely contradicts itself. The boss does the man a favor. The man 
cannot repay the favor. Therefore, the man repays the favor by show- 
ing up at the boss's house with the occasional basket of tomatoes 
and showing him respect. So which one is it? Can he repay the favor, 
or not? 

Peter Freuchen's walrus hunter would, no doubt, think he knew 
exactly what was going on here. Bringing the basket of tomatoes was 
simply the equivalent of saying "Thank you." It was a way of ac- 
knowledging that one owes a debt of gratitude, that gifts had in fact 
made slaves just as whips make dogs. The boss and the employee are 
now fundamentally different sorts of people. The problem is that in 
all other respects, they are not fundamentally different sorts of people. 
Most likely they are both middle-aged Frenchmen, fathers of families, 



citizens of the Republic with similar tastes in music, sports, and food. 
They ought to be equals. As a result, even the tomatoes, which are re- 
ally a token of recognition of the existence of a debt that can never be 
repaid, has to be represented as if it was itself a kind of repayment — 
an interest payment on a loan that could, everyone agrees to pretend, 
someday be paid back, thus returning the two members to their proper 
equal status once again. 57 

(It's telling that the favor is finding the client a job in a factory, 
because what happens is not very different from what happens when 
you get a job in a factory to begin with. A wage-labor contract is, 
ostensibly, a free contract between equals — but an agreement between 
equals in which both agree that once one of them punches the time 
clock, they won't be equals any more. 58 The law does recognize a bit of 
a problem here; that's why it insists that you cannot sell off your equal- 
ity permanently [you are not free to sell yourself into slavery]. Such ar- 
rangements are only acceptable if the boss's power is not absolute, if it 
is limited to work time, and if you have the legal right to break off the 
contract and thereby to restore yourself to full equality, at any time.) 

It seems to me that this agreement between equals to no longer be 
equal (at least for a time) is critically important. It is the very essence 
of what we call "debt." 

What, then, is debt? 

Debt is a very specific thing, and it arises from very specific situ- 
ations. It first requires a relationship between two people who do not 
consider each other fundamentally different sorts of being, who are 
at least potential equals, who are equals in those ways that are really 
important, and who are not currently in a state of equality — but for 
whom there is some way to set matters straight. 

In the case of gift-giving, as we've seen, this requires a certain 
equality of status. That's why our economics professor didn't feel any 
sense of obligation — any debt of honor — if taken out to dinner by 
someone who ranked either much higher or much lower than himself. 
With money loans, all that is required is that the two parties be of 
equal legal standing. (You can't lend money to a child, or to a lunatic. 
Well, you can, but the courts won't help you get it back.) Legal — rather 
than moral — debts have other unique qualities. For instance, they can 
be forgiven, which isn't always possible with a moral debt. 

This means that there is no such thing as a genuinely unpayable 
debt. If there was no conceivable way to salvage the situation, we 



wouldn't be calling it a "debt." Even the French villager could, con- 
ceivably, save his patron's life, or win the lottery and buy the factory. 
Even when we speak of a criminal "paying his debt to society," we are 
saying that he has done something so terrible that he has now been 
banished from that equal status under the law that belongs by natural 
right to any citizen of his country; however, we call it a "debt" because 
it can be paid, equality can be restored, even if the cost may be death 
by lethal injection. 

During the time that the debt remains unpaid, the logic of hierar- 
chy takes hold. There is no reciprocity. As anyone who has ever been 
in jail knows, the first thing the jailors communicate is that nothing 
that happens in jail has anything to do with justice. Similarly, debtor 
and creditor confront each other like a peasant before a feudal lord. 
The law of precedent takes hold. If you bring your creditor tomatoes 
from the garden, it never occurs to you that he would give something 
back. He might expect you to do it again, though. But always there is 
the assumption that the situation is somewhat unnatural, because the 
debt really ought to be paid. 

This is what makes situations of effectively unpayable debt so dif- 
ficult and so painful. Since creditor and debtor are ultimately equals, if 
the debtor cannot do what it takes to restore herself to equality, there 
is obviously something wrong with her; it must be her fault. 

This connection becomes clear if we look at the etymology of com- 
mon words for "debt" in European languages. Many are synonyms for 
"fault," "sin," or "guilt;" just as a criminal owes a debt to society, a 
debtor is always a sort of criminal. 59 In ancient Crete, according to Plu- 
tarch, it was the custom for those taking loans to pretend to snatch the 
money from the lender's purse. Why, he wondered? Probably "so that, 
if they default, they could be charged with violence and punished all 
the more." 60 This is why in so many periods of history insolvent debt- 
ors could be jailed, or even — as in early Republican Rome — executed. 

A debt, then, is just an exchange that has not been brought to 

It follows that debt is strictly a creature of reciprocity and has little 
to do with other sorts of morality (communism, with its needs and 
abilities; hierarchy, with its customs and qualities). True, if we were 
really determined, we could argue (as some do) that communism is a 
condition of permanent mutual indebtedness, or that hierarchy is con- 
structed out of unpayable debts. But isn't this just the same old story, 
starting from the assumption that all human interactions must be, by 
definition, forms of exchange, and then performing whatever mental 
somersaults are required to prove it? 



No. All human interactions are not forms of exchange. Only some 
are. Exchange encourages a particular way of conceiving human rela- 
tions. This is because exchange implies equality, but it also implies 
separation. It's precisely when the money changes hands, when the 
debt is cancelled, that equality is restored and both parties can walk 
away and have nothing further to do with each other. 

Debt is what happens in between: when the two parties cannot 
yet walk away from each other, because they are not yet equal. But 
it is carried out in the shadow of eventual equality. Because achieving 
that equality, however, destroys the very reason for having a relation- 
ship, just about everything interesting happens in between. 61 In fact, 
just about everything human happens in between — even if this means 
that all such human relations bear with them at least a tiny element of 
criminality, guilt, or shame. 

For the Tiv women whom I mentioned earlier in the chapter, this 
wasn't much of a problem. By ensuring that everyone was always 
slightly in debt to one another, they actually created human society, if 
a very fragile sort of society — a delicate web made up of obligations to 
return three eggs or a bag of okra, ties renewed and recreated, as any 
one of them could be cancelled out at any time. 

Our own habits of civility are not so very different. Consider the 
custom, in American society, of constantly saying "please" and "thank 
you." To do so is often treated as basic morality: we are constantly 
chiding children for forgetting to do it, just as the moral guardians 
of our society — teachers and ministers, for instance — do to everybody 
else. We often assume that the habit is universal, but as the Inuit hunter 
made clear, it is not. 62 Like so many of our everyday courtesies, it is a 
kind of democratization of what was once a habit of feudal deference: 
the insistence on treating absolutely everyone the way that one used 
only to have to treat a lord or similar hierarchical superior. 

Perhaps this is not so in every case. Imagine we are on a crowded 
bus, looking for a seat. A fellow passenger moves her bag aside to clear 
one; we smile, or nod, or make some other little gesture of acknowl- 
edgment. Or perhaps we actually say "Thank you." Such a gesture 
is simply a recognition of common humanity: we are acknowledging 
that the woman who had been blocking the seat is not a mere physical 
obstacle but a human being, and that we feel genuine gratitude toward 
someone we will likely never see again. None of this is generally true 
when one asks someone across the table to "please pass the salt," or 
when the postman thanks you for signing for a delivery. We think of 
these simultaneously as meaningless formalities and as the very moral 
basis of society. Their apparent unimportance can be measured by the 



fact that almost no one would refuse, on principle, to say "please" or 
"thank you" in just about any situation — even those who might find it 
almost impossible to say "I'm sorry" or "I apologize." 

In fact, the English "please" is short for "if you please," "if it 
pleases you to do this" — it is the same in most European languages 
(French si il vous plait, Spanish por favor). Its literal meaning is "you 
are under no obligation to do this." "Hand me the salt. Not that I am 
saying that you have to!" This is not true; there is a social obligation, 
and it would be almost impossible not to comply. But etiquette largely 
consists of the exchange of polite fictions (to use less polite language, 
lies). When you ask someone to pass the salt, you are also giving them 
an order; by attaching the word "please," you are saying that it is not 
an order. But, in fact, it is. 

In English, "thank you" derives from "think," it originally meant, 
"I will remember what you did for me" — which is usually not true 
either — but in other languages (the Portuguese obrigado is a good 
example) the standard term follows the form of the English "much 
obliged" — it actually does means "I am in your debt." The French 
merci is even more graphic: it derives from "mercy," as in begging for 
mercy; by saying it you are symbolically placing yourself in your bene- 
factor's power — since a debtor is, after all, a criminal. 63 Saying "you're 
welcome," or "it's nothing" (French de rien, Spanish de nada) — the 
latter has at least the advantage of often being literally true — is a way 
of reassuring the one to whom one has passed the salt that you are not 
actually inscribing a debit in your imaginary moral account book. So is 
saying "my pleasure" — you are saying, "No, actually, it's a credit, not 
a debit — you did me a favor because in asking me to pass the salt, you 
gave me the opportunity to do something I found rewarding in itself!" 64 

Decoding the tacit calculus of debt ("I owe you one," "No, you 
don't owe me anything," "Actually, if anything, it's me who owes you," 
as if inscribing and then scratching off so many infinitesimal entries in 
an endless ledger) makes it easy to understand why this sort of thing 
is often viewed not as the quintessence of morality, but as the quintes- 
sence of middle-class morality. True, by now middle-class sensibilities 
dominate society. But there are still those who find the practice odd. 
Those at the very top of society often still feel that deference is owed 
primarily to hierarchical superiors and find it slightly idiotic to watch 
postmen and pastry cooks taking turns pretending to treat each other 
like little feudal lords. At the other extreme, those who grew up in 
what in Europe are called "popular" environments — small towns, poor 
neighborhoods, anyplace where there is still an assumption that people 
who are not enemies will, ordinarily, take care of one another — will 



often find it insulting to be constantly told, in effect, that there is some 
chance they might not do their job as a waiter or taxi driver correctly, 
or provide houseguests with tea. In other words, middle-class etiquette 
insists that we are all equals, but it does so in a very particular way. On 
the one hand, it pretends that nobody is giving anybody orders (think 
here of the burly security guard at the mall who appears before someone 
walking into a restricted area and says, "Can I help you?"); on the other, 
it treats every gesture of what I've been calling "baseline communism" as 
if it were really a form of exchange. As a result, like Tiv neighborhoods, 
middle-class society has to be endlessly recreated, as a kind of constant 
flickering game of shadows, the criss-crossing of an infinity of momen- 
tary debt relations, each one almost instantly cancelled out. 

All of this is a relatively recent innovation. The habit of always 
saying "please" and "thank you" first began to take hold during the 
commercial revolution of the sixteenth and seventeenth centuries — 
among those very middle classes who were largely responsible for it. It 
is the language of bureaus, shops, and offices, and over the course of 
the last five hundred years it has spread across the world along with 
them. It is also merely one token of a much larger philosophy, a set 
of assumptions of what humans are and what they owe one another, 
that have by now become so deeply ingrained that we cannot see them. 

Sometimes, at the brink of a new historical era, some prescient soul can 
see the full implications of what is beginning to happen — sometimes 
in a way that later generations can't. Let me end with a text by such a 
person. In Paris, sometime in 1540s, Francois Rabelais — lapsed monk, 
doctor, legal scholar — composed what was to become a famous mock 
eulogy, which he inserted in the third book of his great Gargantua and 
Pantagruel, and which came to be known as "In Praise of Debt." 

Rabelais places the encomium in the mouth of one Panurge, a 
wandering scholar and man of extreme classical erudition who, he ob- 
serves, "knew sixty-three ways of making money — the most honorable 
and most routine of which was stealing." 65 The good-natured giant 
Pantagruel adopts Panurge and even provides him with a respectable 
income, but it bothers him that Panurge continues to spend money like 
water and remains up to his ears in debt. Wouldn't it be better, Pan- 
tagruel suggests, to be able to pay his creditors? 

Panurge responds with horror: "God forbid that I should ever be 
out of debt!" Debt is, in fact, the very basis of his philosophy: 



Always owe somebody something, then he will be forever pray- 
ing God to grant you a good, long and blessed life. Fearing to 
lose what you owe him, he will always be saying good things 
about you in every sort of company; he will be constantly ac- 
quiring new lenders for you, so that you can borrow to pay 
him back, filling his ditch with other men's spoil. 66 

Above all else, they will always be praying that you come into 
money. It's like those ancient slaves destined to be sacrificed at their 
masters' funerals. When they wished their master long life and good 
health, they genuinely meant it! What's more, debt can make you into a 
kind of god, who can make something (money, well-wishing creditors) 
out of absolutely nothing. 

Worse still: I give myself to bonnie Saint Bobelin if all my life 
I have not reckoned debts to be, as it were, a connection and 
colligation between Heaven and Earth (uniquely preserving the 
lineage of Man without which, I say, all human beings would 
soon perish) and perhaps to be that great World Soul which, 
according to the Academics, gives life to all things. 

That it really is so, evoke tranquilly in your mind the Idea 
and Form of a world — take if you like the thirtieth of the 
worlds imagined by Metrodorus — in which there were no debt- 
ors or lenders at all. A universe sans debts! Amongst the heav- 
enly bodies there would be no regular course whatsoever: all 
would be in disarray. Jupiter, reckoning that he owed no debt 
to Saturn, would dispossess him of his sphere, and with his Ho- 
meric chain hold in suspension all the Intelligences, gods, heav- 
ens, daemons, geniuses, heroes, devils, earth, sea and all the 
elements . . . The Moon would remain dark and bloody; why 
should the Sun share his light with her? He is under no obliga- 
tion. The Sun would never shine on their Earth; the heavenly 
bodies would pour no good influences down upon it. 

Between the elements there will be no mutual sharing of 
qualities, no alternation, no transmutation whatsoever, one 
will not think itself obliged to the other; it has lent it nothing. 
From earth no longer will water be made, nor water trans- 
muted into air; from air fire will not be made, and fire will not 
warm the earth. Earth will bring forth nothing but monsters, 
Titans, giants. The rain will not rain, the light will shed no 
light, the wind will not blow, and there will be no summer, no 
autumn, Lucifer will tear off his bonds and, sallying forth from 
deepest Hell with the Furies, the Vengeances and the horned 



devils, will seek to turf the gods of both the greater and lesser 
nations out from their nests in the heavens. 

And what's more, if human beings owed nothing to one another, 
life would "be no better than a dog-fight" — a mere unruly brawl. 

Amongst human beings none will save another; it will be no 
good a man shouting Help! Fire! I'm drowning! Murder! No- 
body will come and help him. Why? Because he has lent noth- 
ing: and no one owes him anything. No one has anything to 
lose by his fire, his shipwreck, his fall, or his death. He has lent 
nothing. And: he would lend nothing either hereafter. 

In short, Faith, Hope and Charity would be banished from 
this world. 

Panurge — a man without a family, alone, whose entire calling in 
life was getting large amounts of money and then spending it — serves 
as a fitting prophet for the world that was just beginning to emerge. 
His perspective of course is that of a wealthy debtor — not one liable 
to be trundled off to some pestiferous dungeon for failure to pay. Still, 
what he is describing is the logical conclusion, the reductio ad absur- 
dum, which Rabelais as always lays out with cheerful perversity, of the 
assumptions about the world as exchange slumbering behind all our 
pleasant bourgeois formalities (which Rabelais himself, incidentally, 
detested — the book is basically a mixture of classical erudition and 
dirty jokes). 

And what he says is true. If we insist on defining all human interac- 
tions as matters of people giving one thing for another, then any ongo- 
ing human relations can only take the form of debts. Without them, 
no one would owe anything to anybody. A world without debt would 
revert to primordial chaos, a war of all against all; no one would feel 
the slightest responsibility for one another; the simple fact of being hu- 
man would have no significance; we would all become isolated planets 
who couldn't even be counted on to maintain our proper orbits. 

Pantagruel will have none of it. His own feelings on the matter, he 
says, can be summed up with one line from the Apostle Paul: "Owe 
no man anything, save mutual love and affection." 67 Then, in an ap- 
propriately biblical gesture, he declares, "From your past debts I shall 
free you." 

"What can I do but thank you?" Panurge replies. 

Chapter Six 


WHEN WE RETURN to an examination of conventional economic 
history, one thing that jumps out is how much has been made to dis- 
appear. Reducing all human life to exchange means not only shunting 
aside all other forms of economic experience (hierarchy, communism), 
but also ensuring that the vast majority of the human race who are 
not adult males, and therefore whose day-to-day existence is relatively 
difficult to reduce to a matter of swapping things in such a way as to 
seek mutual advantage, melt away into the background. 

As a result, we end up with a sanitized view of the way actual 
business is conducted. The tidy world of shops and malls is the quintes- 
sential middle-class environment, but at either the top or the bottom of 
the system, the world of financiers or of gangsters, deals are often made 
in ways not so completely different from ways that the Gunwinggu or 
Nambikwara make them — at least in that sex, drugs, music, extrava- 
gant displays of food, and the potential for violence do often play parts. 

Consider the case of Neil Bush (George W.'s brother) who, during 
divorce proceedings with his wife, admitted to multiple infidelities with 
women who, he claimed, would mysteriously appear at his hotel-room 
door after important business meetings in Thailand and Hong Kong. 

"You have to admit it's pretty remarkable," remarked one of 
his wife's attorneys, "for a man to go to a hotel-room door 
and open it and have a woman standing there and have sex 
with her." 

"It was very unusual," Bush replied, admitting however that 
this had happened to him on numerous occasions. 
"Were they prostitutes?" 
"I don't know.'" 

In fact, such things seem almost par for the course when really big 
money comes into play. 



In this light, the economists' insistence that economic life begins 
with barter, the innocent exchange of arrows for teepee frames, with 
no one in a position to rape, humiliate, or torture anyone else, and that 
it continues in this way, is touchingly Utopian. 

As a result, though, the histories we tell are full of blank spaces, 
and the women in them seem to appear out of nowhere, without ex- 
planation, much like the Thai women who appeared at Bush's door. 
Recall the passage cited in Chapter Three, from numismatist Philip 
Grierson, about money in the barbarian law codes: 

Compensation in the Welsh laws is reckoned primarily in cattle 
and in the Irish ones in cattle or bondmaids (cumal), with con- 
siderable use of precious metals in both. In the Germanic codes 
it is mainly in precious metal . . } 

How is it possible to read this passage without immediately stop- 
ping at the end of the first line? "Bondmaids"? Doesn't that mean 
"slaves?" (It does.) In ancient Ireland, female slaves were so plentiful 
and important that they came to function as currency. How did that 
happen? And if we are trying to understand the origins of money, 
here, isn't the fact that people are using one another as currency at all 
interesting or significant? 3 Yet none of the sources on money remark 
much on it. It would seem that by the time of the law codes, slave girls 
were not actually traded, but just used as units of account. Still, they 
must have been traded at some point. Who were they? How were they 
enslaved? Were they captured in war, sold by their parents, or reduced 
to slavery through debt? Were they a major trade item? The answer 
to all these questions would seem to be yes, but it's hard to say more 
because the history remains largely unwritten. 4 

Or let's return to the parable of the ungrateful servant. "Since he 
was not able to pay, the master ordered that he and his wife and his 
children and all that he had be sold to repay the debt." How did that 
happen? Note that we're not even speaking of debt service here (he is 
already his creditor's servant), but outright slavery. How did a man's 
wife and children come to be considered no different than his sheep 
and crockery — as property to be liquidated on the occasion of default? 
Was it normal for a man in first-century Palestine to be able to sell his 
wife? (It wasn't.) 5 If he didn't own her, why was someone else allowed 
to sell her if he couldn't pay his debts? 

The same could be asked of the story in Nehemiah. It's hard not 
to empathize with the distress of a father watching his daughter taken 



off by strangers. On the other hand, one might also ask: Why weren't 
they taking him? The daughter hadn't borrowed any money. 

It's not as if it is ordinary for fathers in traditional societies to be 
able to sell their children. This is a practice with a very specific his- 
tory: it appears in the great agrarian civilizations, from Sumer to Rome 
to China, right around the time when we also start to see evidence 
of money, markets, and interest-bearing loans; later, more gradually, 
it also appears in those surrounding hinterlands that supplied those 
civilizations with slaves. 6 What's more, if we examine the historical 
evidence, there seems good reason to believe that the very obsession 
with patriarchal honor that so defines "tradition" in the Middle East 
and Mediterranean world itself arose alongside the father's power to 
alienate his children — as a reaction to what were seen as the moral per- 
ils of the market. All of this is treated as somehow outside the bounds 
of economic history. 

Excluding all this is deceptive not only because it excludes the main 
purposes to which money was actually put in the past, but because it 
doesn't give us a clear vision of the present. After all, who were those 
Thai women who so mysteriously appeared at Neil Bush's hotel door? 
Almost certainly, they were children of indebted parents. Likely as not, 
they were contractual debt peons themselves. 7 

Focusing on the sex industry would be deceptive, though. Then as 
now, most women in debt bondage spend the vast majority of their 
time sewing, preparing soups, and scouring latrines. Even in the Bible, 
the admonition in the Ten Commandments not to "covet thy neighbor's 
wife" clearly referred not to lust in one's heart (adultery had already 
been covered in commandment number seven), but to the prospect 
of taking her as a debt-peon — in other words, as a servant to sweep 
one's yard and hang out the laundry. 8 In most such matters, sexual 
exploitation was at best incidental (usually illegal, sometimes practiced 
anyway, symbolically important.) Again, once we remove some of our 
usual blinders, we can see that matters have changed far less, over the 
course of the last five thousand years or so, than we really like to think. 

These blinders are all the more ironic when one looks at the anthro- 
pological literature on what used to be called "primitive money" — 
that is, the sort one encounters in places where there are no states or 
markets — whether Iroquois wampum, African cloth money, or Solo- 
mon Island feather money, and discovers that such money is used 



almost exclusively for the kinds of transactions that economists don't 
like to have to talk about. 

In fact, the term "primitive money" is deceptive for this very rea- 
son, since it suggests that we are dealing with a crude version of the 
kind of currencies we use today. But this is precisely what we don't 
find. Often, such currencies are never used to buy and sell anything 
at all. 9 Instead, they are used to create, maintain, and otherwise reor- 
ganize relations between people: to arrange marriages, establish the 
paternity of children, head off feuds, console mourners at funerals, seek 
forgiveness in the case of crimes, negotiate treaties, acquire followers — 
almost anything but trade in yams, shovels, pigs, or jewelry. 

Often, these currencies were extremely important, so much so that 
social life itself might be said to revolve around getting and disposing 
of the stuff. Clearly, though, they mark a totally different conception 
of what money, or indeed an economy, is actually about. I've decided 
therefore to refer to them as "social currencies," and the economies 
that employ them as "human economies." By this I mean not that these 
societies are necessarily in any way more humane (some are quite hu- 
mane; others extraordinarily brutal), but only that they are economic 
systems primarily concerned not with the accumulation of wealth, but 
with the creation, destruction, and rearranging of human beings. 

Historically, commercial economies — market economies, as we 
now like to call them — are a relative newcomer. For most of human 
history, human economies predominated. To even begin to write a 
genuine history of debt, then, we have to start by asking: What sort of 
debts, what sort of credits and debits, do people accumulate in human 
economies? And what happens when human economies begin to give 
away to or are taken over by commercial ones? This is another way of 
asking the question, "How do mere obligations turn into debts?" — but 
it means not just asking the question in the abstract, but examining the 
historical record to try to reconstruct what actually did happen. 

This is what I will do over the course of the next two chapters. 
First I will look at the role of money in human economies, then de- 
scribe what can happen when human economies are suddenly incorpo- 
rated into the economic orbits of larger, commercial ones. The African 
slave trade will serve as a particularly catastrophic case in point. Then, 
in the next chapter, I will return to the first emergence of commercial 
economies in early civilizations of Europe and the Middle East. 



Money as Inadequate Substitute 

The most interesting theory of the origin of money is the one recent- 
ly put forward by a French economist-turned-anthropologist named 
Philippe Rospabe. While his work is largely unknown in the English- 
speaking world, it's quite ingenious, and it bears directly on our prob- 
lem. Rospabe's argument is that "primitive money" was not originally 
a way to pay debts of any sort. It's a way of recognizing the existence 
of debts that cannot possibly be paid. His argument is worth consider- 
ing in detail. 

In most human economies, money is used first and foremost to 
arrange marriages. The simplest and probably most common way of 
doing this was by being presented as what used to be called "bride- 
price": a suitor's family would deliver a certain number of dog teeth, 
or cowries, or brass rings, or whatever is the local social currency, to 
a woman's family, and they would present their daughter as his bride. 
It's easy to see why this might be interpreted as buying a women, and 
many colonial officials in Africa and Oceania in the early part of the 
twentieth century did indeed come to that conclusion. The practice 
caused something of a scandal, and by 1926, the League of Nations was 
debating banning the practice as a form of slavery. Anthropologists 
objected. Really, they explained, this was nothing like the purchase of, 
say, an ox — let alone a pair of sandals. After all, if you buy an ox, you 
don't have any responsibilities to the ox. What you are really buying 
is the right to dispose of the ox in any way that pleases you. Marriage 
is entirely different, since a husband will normally have just as many 
responsibilities toward his wife as his wife will have toward him. It's a 
way of rearranging relations between people. Second of all, if you were 
really buying a wife, you'd be able to sell her. Finally, the real signifi- 
cance of the payment concerns the status of the woman's children: if 
he's buying anything, it's the right to call her offspring his own. 10 

The anthropologists ended up winning the argument, and "bride- 
price" was dutifully redubbed "bridewealth." But they never really an- 
swered the question: What is actually happening here? When a Fijian 
suitor's family presents a whale tooth to ask for a woman's hand in 
marriage, is this an advance payment for the services the woman will 
provide in cultivating her future husband's gardens? Or is he purchas- 
ing the future fertility of her womb? Or is this a pure formality, the 
equivalent of the dollar that has to change hands in order to seal a . con- 
tract? According to Rospabe, it's none of these. The whale tooth, how- 
ever valuable, is not a form of payment. It is really an acknowledgment 



that one is asking for something so uniquely valuable that'payment of 
any sort would be impossible. The only appropriate payment for the 
gift of a woman is the gift of another woman; in the meantime, all one 
can do is to acknowledge the outstanding debt. 

There are places where suitors say this quite explicitly. Consider the 
Tiv of Central Nigeria, who we have already met briefly in the last 
chapter. Most of our information on the Tiv comes from mid-century, 
when they were still under British colonial rule. 11 Everyone at that time 
insisted that a proper marriage should take the form of an exchange 
of sisters. One man gives his sister in marriage to another, that man 
marries the sister of his newfound brother-in-law. This is the perfect 
marriage because the only thing one can really give in exchange for a 
woman is another woman,. 

Obviously, even if every family had exactly equal numbers of 
brothers and sisters, things couldn't always work this neatly. Say I 
marry your sister but you don't want to marry mine (because, say, 
you don't like her, or because she's only five years old). In that case, 
you become her "guardian," which means you can claim the right to 
dispose of her in marriage to someone else — for instance, someone 
whose sister you actually do wish to marry. This system quickly grew 
into a complex system in which most important men became guard- 
ians of numerous "wards," often scattered over wide areas; they would 
swap and trade them and in the process accumulate numerous wives 
for themselves, while less-fortunate men were only able to marry late 
in life, or not at all. 12 

There was one other expedient. The Tiv at that time used bundles 
of brass rods as their most prestigious form of currency. Brass rods 
were only held by men, and never used to buy things in markets (mar- 
kets were dominated by women); instead, they were exchanged only 
for things that men considered of higher importance: cattle, horses, 
ivory, ritual titles, medical treatment, magical charms. It was possible, 
as one Tiv ethnographer, Akiga Sai, explains, to acquire a wife with 
brass rods, but it required quite a lot of them. You would need to give 
two or three bundles of them to her parents to establish yourself as a 
suitor; then, when you did finally make off with her (such marriages 
were always first framed as elopements), another few bundles to as- 
suage her mother when she showed up angrily demanding to know 
what was going on. This would normally be followed by five more 
to get her guardian to at least temporarily accept the situation, and 



more still to her parents when she gave birth, if you were to have any 
chance of their accepting your claims to be the father of her children. 
That might get her parents off your back, but you'd have to pay off the 
guardian forever, because you could never really use money to acquire 
the rights to a woman. Everyone knew that the only thing you can 
legitimately give in exchange for a woman is another woman. In this 
case, everyone has to abide by the pretext that a woman will someday 
be forthcoming. In the meantime, as one ethnographer succinctly puts 
it, "the debt can never be fully paid." 13 

According to Rospabe, the Tiv are just making explicit the un- 
derlying logic of bridewealth everywhere. The suitor presenting bride- 
wealth is never paying for a woman, or even for the rights to claim her 
children. That would imply that brass rods, or whale's teeth, cowrie 
shells, or even cattle are somehow the equivalent of a human being, 
which by the logic of a human economy is obviously absurd. Only a 
human could ever be considered equivalent to another human. All the 
more so since, in the case of marriage, we are speaking of something 
even more valuable than one human life: we are speaking of a human 
life that also has the capacity to generate new lives. 

Certainly, many of those who pay bridewealth are, like the Tiv, 
quite explicit about all this. Bridewealth money is presented not to 
settle a debt, but as a kind of acknowledgment that there exists a 
debt that cannot be settled by means of money. Often the two sides 
will maintain at least the polite fiction that there will, someday, be a 
recompense in kind: that the suitor's clan will eventually provide one 
of its own women, perhaps even that very woman's daughter or grand- 
daughter, to marry a man of the wife's natal clan. Or maybe there will 
be some arrangement about the disposition of her children; perhaps her 
clan will get to keep one for itself. The possibilities are endless. 

Money, then, begins, as Rospabe himself puts it, "as a substitute for 
life." 14 One might call it the recognition of a life-debt. This, in turn, ex- 
plains why it's invariably the exact same kind of money that's used to 
arrange marriages that is also used to pay wergeld (or "bloodwealth" 
as it's sometimes also called): money presented to the family of a mur- 
der victim so as to prevent or resolve a blood-feud. Here the sources 
are even more explicit. On the one hand, one presents whale teeth or 
brass rods because the murderer's kin recognize they owe a life to the 
victim's family. On the other, whale teeth or brass rods are in no sense, 
and can never be, compensation for the loss of a murdered relative. 



Certainly no one presenting such compensation would ever be foolish 
enough to suggest that any amount of money could possibly be the 
"equivalent" to the value of someone's father, sister, or child. 

So here again, money is first and foremost an acknowledgment that 
one owes something much more valuable than money. 

In the case of a blood-feud, both parties will also be aware that 
even a revenge killing, while at least it conforms to the principle of a 
life for a life, won't really compensate for the victim's grief and pain 
either. This knowledge allows for some possibility of settling the mat- 
ter without violence. But even here, there is often a feeling that, as in 
the case of marriage, the real solution to the problem is simply being 
temporarily postponed. 

An illustration might be helpful. Among the Nuer, there is a special 
class of priestly figures who specialize in mediating feuds, referred to in 
the literature as "leopard-skin chiefs." If one man murders another, he 
will immediately seek out one of their homesteads, since such a home- 
stead is treated as an inviolate sanctuary: even the dead man's family, 
who will be honor-bound to avenge the murder, will know that they 
cannot enter it, lest terrible consequences ensue. According to Evans- 
Pritchard's classic account, the chief will immediately start trying to 
negotiate a settlement between the murderer and victim's families, a 
delicate business, because the victim's family will always first refuse: 

The chief first finds out what cattle the slayer's people possess 
and what they are prepared to pay in compensation. ... He 
then visits the dead man's people and asks them to accept cattle 
for the life. They usually refuse, for it is a point of honor to be 
obstinate, but their refusal does not mean that they are unwill- 
ing to accept compensation. The chief knows this and insists 
on their acceptance, even threatening to curse them if they do 
not give way . . .' 5 

More-distant kin weigh in, reminding everyone of their responsi- 
bility to the larger community, of all the trouble that an outstanding 
feud will cause to innocent relatives, and after a great show of holding 
out, insisting that it is insulting to suggest that any number of cattle 
could possibly substitute for the life of a son or brother, they will usu- 
ally grudgingly accept. 16 In fact, even once the matter has technically 
been settled, it really hasn't — it usually takes years to assemble the 
cattle, and even once they have been paid, the two sides will avoid 
each other, "especially at dances, for in the excitement they engender, 
merely bumping into a man whose kinsman has been slain may cause 



a fight to break out, because the'offense is never forgiven and the score 
must finally be paid with a life." 17 

So it's much the same as with bridewealth. Money does not wipe 
out the debt. One life can only be paid for with another. At best those 
paying bloodwealth, by admitting the existence of the debt and insist- 
ing that they wish they could pay it, even though they know this is 
impossible, can allow the matter to be placed permanently on hold. 

Halfway around the world, one finds Lewis Henry Morgan de- 
scribing the elaborate mechanisms set up by the Six Nations of the 
Iroquois to avoid precisely this state of affairs. In the event one man 
killed another, 

Immediately on the commission of a murder, the affair was 
taken up by the tribes to which the parties belonged, and stren- 
uous efforts were made to effect a reconciliation, lest private 
retaliation should lead to disastrous consequences. 

The first council ascertained whether the offender was will- 
ing to confess his crime, and to make atonement. If he was, 
the council immediately sent a belt of white wampum, in his 
name, to the other council, which contained a message to that 
effect. The latter then endeavored to pacify the family of the 
deceased, to quiet their excitement, and to induce them to ac- 
cept the wampum as condonation. 18 

Much as in the case of the Nuer, there were complicated schedules 
of exactly how many fathoms of wampum were paid over, depending 
on the status of the victim and the nature of the crime. As with the 
Nuer, too, everyone insisted that this was not payment. The value of 
the wampum in no sense represented the value of the dead man's life: 

The present of white wampum was not in the nature of a 
compensation for the life of the deceased, but of a regretful 
confession of the crime, with a petition for forgiveness. It was a 
peace-offering, the acceptance of which was pressed by mutual 
friends ..." 

Actually, in many cases there was also some way to manipulate 
the system to turn payments meant to assuage one's rage and grief into 
ways of creating a new life that would in some sense substitute for the 
one that was lost. Among the Nuer, forty cattle were set as the stan- 
dard fee for bloodwealth. But it was also the standard rate of bride- 
wealth. The logic was this: if a man had been murdered before he was 



able to marry and produce offspring, it's only natural that his spirit 
would be angry. He had been, effectively, robbed of his eternity. The 
best solution would be to use the cattle paid in settlement to acquire 
what was called a "ghost-wife": a woman who would then be formally 
married to the dead man. In practice, she was usually paired off with 
one of the victim's brothers, but this was not particularly important; 
it didn't really matter too much who impregnated her, since he would 
be in no sense the father of her children. Her children would be con- 
sidered the children of the victim's ghost — and as a result, any boys 
among them were seen as having been born with a particular commit- 
ment to someday avenge his death. 20 

This latter is unusual. But Nuer appear to have been unusually 
stubborn about feuds. Rospabe provides examples from other parts of 
the world that are even more telling. Among North African Bedouins, 
for instance, it sometimes happened that the only way to settle a feud 
was for the killer's family to turn over a daughter, who would then 
marry the victim's next of kin — his brother, say. If she bore him a male 
child, the boy was given the same name as his dead uncle and consid- 
ered to be, at least in the broadest sense, a substitute for him. 21 The 
Iroquois, who traced descent in the female line, did not trade women 
in this fashion. However, they had another, more direct approach. If a 
man died — even of natural causes — his wife's relatives might "put his 
name upon the mat," sending off belts of wampum to commission a 
war party, which would then raid an enemy village to secure a captive. 
The captive could either be killed, or, if the clan matrons were in a 
benevolent mood (one could never tell; the grief of mourning is tricky), 
adopted: this was signified by throwing a belt of wampum around his 
shoulders, whereon he would be given the name of the deceased and 
be considered, from that moment on, married to the victim's wife, the 
owner of his personal possessions, and in every way, effectively, the 
exact same person as the dead man used to be. 22 

All of this merely serves to underline Rospabe's basic point, which 
is that money can be seen, in human economies, as first and foremost 
the acknowledgment of the existence of a debt that cannot be paid. 

In a way, it's all very reminiscent of primordial-debt theory: money 
emerges from the recognition of an absolute debt to that which has 
given you life. The difference is that instead of imagining such debts 
as between an individual and society, or perhaps the cosmos, here they 
are imagined as a kind of network of dyadic relations: almost everyone 
in such societies was in a relation of absolute debt to someone else. It's 
not that we owe "society." If there is any notion of "society" here — and 
it's not clear that there is — society is our debts. 



Blood Debts (Lele) 

Obviously, this leads us to the same familiar problem: How does a 
token of recognition that one cannot pay a debt turn into a form of 
payment by which a debt can be extinguished? If anything, the problem 
seems even worse than it was before. 

In fact, it isn't. The African evidence clearly shows how such things 
can happen — though the answer is a bit unsettling. To demonstrate 
this, it will be necessary to look at one or two African societies with a 
closer focus. 

I'll start with the Lele, an African people who had, at the time that 
Mary Douglas studied them in the 1950s, managed to turn the principle 
of blood debts into the organizing principle of their entire society. 

The Lele were, at that time, a group of perhaps ten thousand 
souls, living on a stretch of rolling country near the Kasai River in the 
Belgian Congo, and considered a rude backcountry folk by their richer 
and more cosmopolitan neighbors, the Kuba and Bushong. Lele women 
grew maize and manioc; the men thought of themselves as intrepid 
hunters but spent most of their time weaving and sewing raffia-palm 
cloth. This cloth was what the area was really known for. It was not 
only used for every sort of clothing, but also exported: the Lele consid- 
ered themselves the clothiers of the region, and it was traded with sur- 
rounding people to acquire luxuries. Internally, it functioned as a sort 
of currency. Still, it was not used in markets (there were no markets), 
and, as Mary Douglas discovered to her great inconvenience, within a 
village, one couldn't use it to acquire food, tools, tableware, or really 
much of anything. 11 It was the quintessential social currency. 

Informal gifts of raffia cloth smooth all social relations: hus- 
band to wife, son to mother, son to father. They resolve oc- 
casions of tension, as peace-offerings; they make parting gifts, 
or convey congratulations. There are also formal gifts of raffia 
which are neglected only at risk of rupture of the social ties in- 
volved. A man, on reaching adulthood, should give 20 cloths to 
his father. Otherwise he would be ashamed to ask his father's 
help for raising his marriage dues. A man should give 20 cloths 
to his wife on each delivery of a child . . . 24 

Cloth was also used for various fines and fees, and to pay curers. 
So for instance, if a man's wife reported a would-be seducer, it was 
customary to reward her with 20 cloths for her fidelity (it was not 



required, but not doing so was considered decidedly unwise); if an 
adulterer was caught, he was expected to pay 50 or 100 cloths to the 
woman's husband; if the husband and lover disturbed the peace of the 
village by fighting before the matter was settled, each would have to 
pay two in compensation, and so forth. 

Gifts tended to flow upward. Young people were always giving 
little presents of cloth as marks of respect to fathers, mothers, uncles, 
and the like. These gifts were hierarchical in nature: that is, it never 
occurred to those receiving them that they should have to reciprocate 
in any way. As a result, elders, and especially elder men, usually had a 
few extra pieces lying around, and young men, who could never weave 
quite enough to meet their needs, would have to turn to them whenever 
time for some major payment rolled around: for instance, if they had to 
pay a major fine, or wished to hire a doctor to assist their wife in child- 
birth, or wanted to join a cult society. They were thus always slightly 
in debt, or at least slightly beholden, to their elders. But everyone also 
had a whole range of friends and relatives who they had helped out, 
and so could turn to for assistance. 25 

Marriage was particularly expensive, since the arrangements usually 
required getting one's hands on several bars of camwood. If raffia cloth 
was the small change of social life, camwood — a rare imported wood 
used for the manufacture of cosmetics — was the high-denomination 
currency. A hundred raffia cloths were equivalent to three to five bars. 
Few individuals owned much in the way of camwood, usually just little 
bits to grind up for their own use. Most was kept in each village's col- 
lective treasury. 

This is not to say that camwood was used for anything like 
bridewealth — rather, it was used in marriage negotiations, in which 
all sorts of gifts were passed back and forth. In fact, there was no 
bridewealth. Men could not use money to acquire women; nor could 
they use it to claim any rights over children. The Lele were matrilineal. 
Children belonged not to their father's clan, but to their mother's. 

There was another way that men gained control over women, 
however. 26 This was the system of blood debts. 

It is a common understanding among many traditional African 
peoples that human beings do not simply die without a reason. If 
someone dies, someone must have killed them. If a Lele woman died 
in childbirth, for example, this was assumed to be because she had 
committed adultery. The adulterer was thus responsible for the death. 
Sometimes she would confess on her deathbed, otherwise the facts of 
the matter would have to be established through divination. It was 
the same if a baby died. If someone became sick, or slipped and fell 



while climbing a tree, one would check to see if they had been involved 
in any quarrel that could be said to have caused the misfortune. If all 
else failed, one could employ magical means to identify the sorcerer. 
Once the village was satisfied that a culprit had been identified, that 
person owed a blood-debt: that is, he owed the victim's next of kin 
a human life. The culprit would thus have to transfer over a young 
woman from his family, his sister or her daughter, to be the victim's 
ward, or "pawn." 

As with the Tiv, the system quickly became immensely compli- 
cated. Pawnship was inherited. If a woman was someone's pawn, so 
would her children be, and so would her daughters' children. This 
meant that most males were also considered someone else's man. Still, 
no one would accept a male pawn in payment of blood-debts: the 
whole point was to get hold of a young woman, who would then go 
on to produce additional pawn children. Douglas's Lele informants 
emphasized that any man would naturally want to have many of these 
as possible: 

Ask "Why do you want to have more pawns?" and they invari- 
ably say, "The advantage of owning pawns is that if you incur 
a blood-debt, you can settle it by paying one of your pawns, 
and your own sisters remain free." Ask, "Why do you wish 
your own sisters to remain free?" and they reply, "Ah! then if 
I incur a blood-debt, I can settle it by giving one of them as 
a pawn ..." 

Every man is always aware that at any time he is liable for 
a blood-debt. If any woman he has seduced confesses his name 
in the throes of child-birth, and subsequently dies, or if her 
child dies, or if anyone he has quarreled with dies of illness 
or accident, he may be held responsible . . . Even if a woman 
runs away from her husband, and fighting breaks out on her 
account, the deaths will be laid at her door, and her brother 
or mother's brother will have to pay up. Since only women 
are accepted as blood-compensation, and since compensation 
is demanded for all deaths, of men as well as of women, it is 
obvious that there can never be enough to go around. Men fall 
into arrears in their pawnship obligations, and girls used to be 
pledged before their birth, even before their mothers were of 
marriageable age. 27 

In other words, the whole thing turned into an endlessly complicat- 
ed chess game — one reason, Douglas remarks, why the term "pawn" 



seems singularly apropos. Just about every adult Lele male was both 
someone else's pawn, and engaged in a constant game of securing, 
swapping, or redeeming pawns. Every major drama or tragedy of vil- 
lage life would ordinarily lead to a transfer of rights in women. Almost 
all of those women would eventually get swapped again. 

Several points need to be emphasized here. First of all, what were 
being traded were, quite specifically, human lives. Douglas calls them 
"blood-debts," but "life-debts" would be more appropriate. Say, for 
instance, a man is drowning, and another man rescues him. Or say 
he's deathly ill but a doctor cures him. In either case, we would likely 
say one man "owes his life" to the other. So would the Lele, but they 
meant it literally. Save someone's life, they owe you a life, and a life 
owed had to be paid back. The usual recourse was for a man whose life 
was saved to turn over his sister as a pawn — or if not that, a different 
woman; a pawn he had acquired from someone else. 

The second point is that nothing could substitute for a human life. 
"Compensation was based on the principle of equivalence, a life for a 
life, a person for a person." Since the value of a human life was abso- 
lute, no amount of raffia cloth, or camwood bars, or goats, or transis- 
tor radios, or anything else could possibly take its place. 

The third and most important point is that in practice, "human 
life" actually meant "woman's life" — or even more specifically, "young 
woman's life." Ostensibly this was to maximize one's holdings: above 
all, one wished for a human being who could become pregnant and 
produce children, since those children would also be pawns. Still, even 
Mary Douglas, who was in no sense a feminist, was forced to admit that 
the whole arrangement did seem to operate as if it were one gigantic 
apparatus for asserting male control over women. This was true above 
all because women themselves could not own pawns. 28 They could only 
be pawns. In other words: when it came to life-debts, only men could 
be either creditors or debtors. Young women were thus the credits and 
the debits — the pieces being moved around the chessboard — while the 
hands that moved them were invariably male. 29 

Of course, since almost everyone was a pawn, or had been at some 
point in their lives, being one could not in itself be much of a tragedy. 
For male pawns it was in some ways quite advantageous, since one's 
"owner" had to pay most of one's fines and fees and even blood-debts. 
This is why, as Douglas's informants uniformly insisted, pawnship had 
nothing in common with slavery. The Lele did keep slaves, but never 
very many. Slaves were war captives, usually foreigners. As such they 
had no family, no one to protect them. To be a pawn, on the other 
hand, meant to have not one, but two different families to look after 



you: you still had your own mother and her brothers, but now you also 
had your "lord." 

For a woman, the very fact that she was the stakes in a game that 
all men were playing afforded all sorts of opportunities to game the 
system. In principle, a girl might be born a pawn, assigned to some 
man for eventual marriage. In practice, however, 

a little Lele girl would grow up a coquette. From infancy she 
was the centre of affectionate, teasing, flirting attention. Her 
affianced husband never gained more than a very limited con- 
trol over her . . . Since men competed with one another for 
women there was scope for women to manoeuvre and intrigue. 
Hopeful seducers were never lacking and no woman doubted 
that she could get another husband if it suited her. 30 

In addition, a young Lele woman had one unique and powerful card 
to play. Everyone was well aware that, if she completely refused to 
countenance her situation, she always had the option of becoming a 
"village-wife." 31 

The institution of village-wife was a peculiarly Lele one. Probably 
the best way to describe it is to imagine a hypothetical case. Let us say 
that an old, important man acquires a young woman as pawn through 
a blood-debt, and he decides to marry her himself. Technically, he has 
the right to do so, but it's no fun for a young woman to be an old 
man's third or fourth wife. Or, say he decides to offer her in marriage 
to one of his male pawns in a village far away from her mother and 
natal home. She protests. He ignores her protestations. She waits for 
an opportune moment and slips off at night to an enemy village, where 
she asks for sanctuary. This is always possible: all villages have their 
traditional enemies. Neither would an enemy village refuse a woman 
who came to them in such a situation. They would immediately de- 
clare her "wife of the village," who all men living there would then be 
obliged to protect. 

It helps to understand that here, as in many parts of Africa, most 
older men had several wives. This meant that the pool of women avail- 
able for younger men was considerably reduced. As our ethnographer 
explains, the imbalance was a source of considerable sexual tension: 

Everyone recognized that the young unmarried men coveted 
the wives of their seniors. Indeed, one of their pastimes was to 
plan seductions and the man who boasted of none was derided. 
Since the old men wished to remain polygynists, with two or 



three wives, and since adulteries were thought to disrupt the 
peace of the village, Lele had to make some arrangement to 
appease their unmarried men. 

Therefore, when a sufficient number of them reached the 
age of eighteen or so, they were allowed to buy the right to a 
common wife. 32 

After paying an appropriate fee in raffia cloth to the village treasury, 
they were permitted to build a collective house, and then they were ei- 
ther allotted a wife to put in it, or allowed to form a party that would 
try to steal one from a rival village. (Or, alternately, if one showed 
up as a refugee, they would ask the rest of the village for the right to 
accept her: this was invariably granted.) This common wife is what's 
referred to as a "village wife." The position of village wife was more 
than respectable. In fact, a newly married village wife was treated very 
much like a princess. She was not expected to plant or weed in the 
gardens, fetch wood or water, or even to cook; all household chores 
were done by her eager young husbands, who provided the best of 
everything, spending much of their time hunting in the forest vying 
to bring her the choicest delicacies, or plying her with palm wine. She 
could help herself to others' possessions and was expected to make all 
sorts of mischief to the bemused indulgence of all concerned. She was 
also expected to make herself sexually available to all members of the 
age-set — perhaps ten or twelve different men — at first, pretty much 
whenever they wanted her. 33 

Over time, a village wife would usually settle down with just three 
or four of her husbands, and finally, just one. The domestic arrange- 
ments were flexible. Nonetheless, in principle, she was married to the 
village as a whole. If she had children, the village was considered to 
be their father, and as such expected to bring them up, provide them 
with resources, and eventually, get them properly married off — which 
is why villages had to maintain collective treasuries full of raffia and 
camwood bars in the first place. Since at any time a village was likely 
to have several village wives, it would also have its own children and 
grandchildren, and therefore be in a position to both demand and pay 
blood-debts, and thus, to accumulate pawns. 

As a result, villages became corporate bodies, collective groups 
that, like modern corporations, had to be treated as if they were indi- 
viduals for purposes of law. However there was one key difference. Un- 
like ordinary individuals, villages could back up their claims with force. 

As Douglas emphasizes, this was crucial, because ordinary Lele 
men were simply not able to do this to one another. 34 In everyday 



affairs, there was an almost complete lack of any systematic means of 
coercion. This was the main reason, she notes, that pawnship was so 
innocuous. There were all sorts of rules, but with no government, no 
courts, no judges to make authoritative decisions, no group of armed 
men willing or able to employ the threat of force to back those deci- 
sions up, rules were there to be adjusted and interpreted. In the end, 
everyone's feelings had to be taken into account. In everyday affairs, 
Lele put great stock on gentle and agreeable behavior. Men might have 
been regularly seized with the urge to throw themselves at each other in 
fits of jealous rage (often they had good reason to), but they very rarely 
did. And if a fight did break out, everyone would immediately jump in 
to break it up and submit the affair to public mediation.' 5 

Villages, in contrast, were fortified, and age-sets could be mobilized 
to act as military units. Here, and only here, did organized violence 
enter the picture. True, when villages fought, it was also always over 
women (everyone Douglas talked to expressed incredulity at the very 
idea that grown men, anywhere, could ever come to blows over any- 
thing else). But in the case of villages, it could come to an actual war. 
If another village's elders ignored one's claims to a pawn, one's young 
men might organize a raiding party and kidnap her, or carry off some 
other likely young women to be their collective wife. This might lead 
to deaths, and to further claims for compensation. "Since it had the 
backing of force," Douglas observes drily, "the village could afford to 
be less conciliatory towards the wishes of its pawns." 36 

It's at exactly this point, too, where the potential for violence 
enters, that the great wall constructed between the value of lives and 
money can suddenly come tumbling down. 

Sometimes when two clans were disputing a claim to blood 
compensation, the claimant might see no hope of getting sat- 
isfaction from his opponents. The political system offered no 
direct means for one man (or clan) to use physical coercion or 
to resort to superior authority to enforce claims against an- 
other. In such a case, rather than abandon his claim to a pawn- 
woman, he would be ready to take the equivalent in wealth, if 
he could get it. The usual procedure was to sell his case against 
the defendants to the only group capable of extorting a pawn 
by force, that is, to a village. 

The man who meant to sell his case to a village asked them 
for 100 raffia cloths or five bars of camwood. The village raised 
the amount, either from its treasury, or by a loan from one 



of its members, and thereby adopted as its own his claim to 
a pawn. 37 

Once he held the money, his claim was over, and the village, which had 
now bought it, would proceed to organize a raid to seize the woman 
in dispute. 

In other words, it was only when violence was brought into the 
equation that there was any question of buying and selling people. The 
ability to deploy force, to cut through the endless maze of preferences, 
obligations, expectations, and responsibilities that mark real human 
relationships, also made it possible to overcome what is otherwise the 
first rule of all Lele economic relationships: that human lives can only 
be exchanged for other human lives, and never for physical objects. 
Significantly, the amount paid — a hundred cloths, or an equivalent 
amount of camwood — was also the price of a slave. 38 Slaves were, as 
I mentioned, war captives. There seem never to have been very many 
of them; Douglas only managed to locate two descendants of slaves 
in the 1950s, some twenty-five years after the practice had been abol- 
ished. 39 Still, the numbers were not important. The mere fact of their 
existence set a precedent. The value of a human life could, sometimes, 
be quantified; but if one was able to move from A = A (one life equals 
another) to A = B (one life = one hundred cloths), it was only because 
the equation was established at the point of a spear. 

Flesh-Debt (Tiv) 

I have dwelt on the Lele in such detail in part because I wanted to con- 
vey some sense of why I was using the term "human economy," what 
life is like inside one, what sort of dramas fill people's days, and how 
money typically operates in the midst of all this. Lele currencies are, 
as I say, quintessential social currencies. They are used to mark every 
visit, every promise, every important moment in a man's or woman's 
life. It is surely significant, too, what the objects used as currency here 
actually were. Raffia cloth was used for clothing. In Douglas's day, 
it was the main thing used to clothe the human body; camwood bars 
were the source of a red paste that was used as a cosmetic — it was the 
main substance used as makeup, by both men and women, to beautify 
themselves each day. These, then, were the materials used to shape 
people's physical appearance, to make them appear mature, decent, at- 
tractive, and dignified to their fellows. They were what turned a mere 
naked body into a proper social being. 



This is no coincidence. In fact, it's extraordinarily common in 
what I've been calling human economies. Money almost always arises 
first from objects that are used primarily as adornment of the person. 
Beads, shells, feathers, dog or whale teeth, gold, and silver are all well- 
known cases in point. All are useless for any purpose other than mak- 
ing people look more interesting, and hence, more beautiful. The brass 
rods used by the Tiv might seem an exception, but actually they're not: 
they were used mainly as raw material for the manufacture of jewelry, 
or simply twisted into hoops and worn at dances. There are exceptions 
(cattle, for instance), but as a general rule, it's only when governments, 
and then markets, enter the picture that we begin to see currencies like 
barley, cheese, tobacco, or salt. 40 

It also illustrates the peculiar progression of ideas that so often 
mark human economies. On the one hand, human life is the absolute 
value. There is no possible equivalent. Whether a life is given or taken, 
the debt is absolute. In places, this principle is indeed sacrosanct. More 
often, it is compromised by the elaborate games played by the Tiv, who 
treat the giving of lives, and the Lele, who treat the taking of lives, 
as creating debts that can only be paid by delivering another human 
being. In each case, too, the practice ends up engendering an extraor- 
dinarily complex game in which important men end up exchanging 
women, or at least, rights over their fertility. 

But this is already a kind of opening. Once the game exists, once 
the principle of substitution comes in, there was always the possibility 
of extending it. When that begins to happen, systems of debt that were 
premised on creating people can — even here — suddenly become the 
means of destroying them. 

As an example, let us once again return to the Tiv. The reader will 
recall that if a man did not have a sister or a ward to give in exchange 
for one's wife, it was possible to assuage her parents and guardians by 
gifts of money. However, such a wife would never be considered truly 
his. Here too, there was one dramatic exception. A man could buy a 
slave, a woman kidnapped in a raid from a distant country. 41 Slaves, 
after all, had no parents, or could be treated as if they didn't; they had 
been forcibly removed from all those networks of mutual obligation 
and debt in which ordinary people acquired their outward identities. 
This was why they could be bought and sold. 

Once married, though, a purchased wife would quickly develop 
new ties. She was no longer a slave, and her children were perfectly 
legitimate — more so, in fact, than those of a wife who was merely ac- 
quired through the continual payment of brass rods. 



We have perhaps a general principle: to make something saleable, 
in a human economy, one needs to first rip it from its context. That's 
what slaves are: people stolen from the community that made them 
what they are. As strangers to their new communities, slaves no longer 
had mothers, fathers, kin of any sort. This is why they could be bought 
and sold or even killed: because the only relation they had was to their 
owners. A Lele village's ability to organize raids and kidnap a woman 
from an alien community seems to have been the key to its ability to 
start trading women for money — even if in their case, they could do so 
only to a very limited extent. After all, her relatives were not very far 
away, and they would surely come around demanding an explanation. 
In the end, someone would have to come up with an arrangement that 
everyone could live with. 42 

Still, I would also insist that there is something more than this. 
One gets the distinct sense, in much of the literature, that many African 
societies were haunted by the awareness that these elaborate networks 
of debt could, if things went just slightly wrong, be transformed into 
something absolutely terrible. The Tiv are a dramatic case in point. 

Among students of anthropology, the Tiv are mainly famous for the 
fact that their economic life was divided into what their best-known 
ethnographers, Paul and Laura Bohannan, referred to as three sepa- 
rate "spheres of exchange." Ordinary, everyday economic activity was 
mostly the affair of women. They were the ones who filled the markets, 
and who trod the paths giving and returning minor gifts of okra, nuts, 
or fish. Men concerned themselves with what they considered higher 
things: the kind of transactions that could be conducted using the Tiv 
currency, which, as with the Lele, consisted of two denominations, a 
kind of locally made cloth called tugudu, widely exported, and, for ma- 
jor transactions, bundles of imported brass rods. 43 These could be used 
to acquire certain flashy and luxurious things (cows, purchased foreign 
wives), but they were mainly for the give and take of political affairs, 
hiring curers, acquiring magic, gaining initiation into cult societies. In 
political matters, Tiv were even more resolutely egalitarian than the 
Lele: successful old men with their numerous wives might have lorded 
it over their sons and other dependants within their own house com- 
pounds, but beyond that, there was no formal political organization 
of any sort. Finally, there was the system of wards, which consisted 
entirely of men's rights in women. Hence, the notion of "spheres." In 
principle, these three levels — ordinary consumption goods, masculine 



prestige goods, and rights in women — were completely separate. No 
amount of okra could get you a brass rod, just as, in principle, no 
number of brass rods could give you full rights to a woman. 

In practice, there were ways to game the system. Say a neighbor 
was sponsoring a feast but was short on supplies; one might come to 
his aid, then later, discreetly, ask for a bundle or two in repayment. To 
be able to wheel and deal, to "turn chickens into cows," as the saying 
went, and ultimately, broker one's wealth and prestige into a way of 
acquiring wives, required a "strong heart" — that is, an enterprising and 
charismatic personality. 44 But "strong heart" had another meaning too. 
There was believed to be a certain actual biological substance called 
tsav that grew on the human heart. This was what gave certain people 
their charm, their energy, and their powers of persuasion. Tsav there- 
fore was both a physical substance and that invisible power that allows 
certain people to bend others to their will. 45 

The problem was — and most Tiv of that time appear to have be- 
lieved that this was the problem with their society — that it was also 
possible to augment one's tsav through artificial means, and this could 
only be accomplished by consuming human flesh. 

Now, I should emphasize right away that there is no reason to be- 
lieve that any Tiv actually did practice cannibalism. The idea of eating 
human flesh appears to have disgusted and horrified them as much as 
it would most Americans. Yet for centuries, most appear to have been 
veritably obsessed by the suspicion that some of their neighbors — and 
particularly prominent men who became de facto political leaders — 
were, in fact, secret cannibals. Men who built up their tsav by such 
means, the stories went, attained extraordinary powers: the ability to 
fly, to become impervious to weapons, to be able to send out their 
souls at night to kill their victims in such a way that their victims did 
not even know that they were dead, but would wander about, confused 
and feckless, to be harvested for their cannibal feasts. They became, in 
short, terrifying witches. 46 

The mbatsav, or society of witches, was always looking for new 
members, and the way to accomplish this was to trick people into eat- 
ing human flesh. A witch would take a piece of the body of one of his 
own close relatives, who he had murdered, and place it in the victim's 
food. If the man was foolish enough to eat it, he would contract a 
"flesh-debt," and the society of witches ensured that flesh-debts are 
always paid. 

Perhaps your friend, or some older man, has noticed that you 
have a large number of children, or brothers and sisters, and so 



tricks you into contracting the debt with him. He invites you 
to eat food in his house alone with him, and when you begin 
the meal he sets before you two dishes of sauce, one of which 
contains cooked human flesh . . . 

If you eat from the wrong dish, but you do not have a "strong 
heart" — the potential to become a witch — you will become sick and 
flee from the house in terror. But if you have that hidden potential, the 
flesh will begin to work in you. That evening, you will find your house 
surrounded by screeching cats and owls. Strange noises will fill the air. 
Your new creditor will appear before you, backed by his confederates 
in evil. He will tell of how he killed his own brother so you two could 
dine together, and pretend to be tortured by the thought of having lost 
his own kin as you sit there, surrounded by your plump and healthy 
relatives. The other witches will concur, acting as if all this is your own 
fault. "You have sought for trouble, and trouble has come upon you. 
Come and lie down on the ground, that we may cut your throat." 47 

There's only one way out, and that's to pledge a member of your 
own family as substitute. This is possible, because you will find you 
have terrible new powers, but they must be used as the other witches 
demand. One by one, you must kill off your brothers, sisters, children; 
their bodies will be stolen from their graves by the college of witches, 
brought back to life just long enough to be properly fattened, tortured, 
killed again, then carved and roasted for yet another feast. 

The flesh debt goes on and on. The creditor keeps on coming. 
Unless the debtor has men behind him who are very strong in 
tsav, he cannot free himself from the flesh debt until he has 
given up all his people, and his family is finished. Then he goes 
himself and lies down on the ground to be slaughtered, and so 
the debt is finally discharged. 48 

The Slave Trade 

In one sense, it's obvious what's going on here. Men with "strong 
hearts" have power and charisma; using it, they can manipulate debt 
to turn extra food into treasures, and treasures into wives, wards, and 
daughters, and thus become the heads of ever-growing families. But 
that very power and charisma that allows them to do this also makes 
them run the constant danger of sending the whole process jolting back 



into a kind of horrific implosion, of creating flesh-debts whereby one's 
family is converted back into food. 

Now, if one is simply trying to imagine the worst thing that could 
possibly happen to someone, surely, being forced to dine on the mu- 
tilated corpses of one's own children would, anywhere, be pretty high 
on the list. Still, anthropologists have come to understand, over the 
years, that every society is haunted by slightly different nightmares, 
and these differences are significant. Horror stories, whether about 
vampires, ghouls, or flesh-eating zombies, always seem to reflect some 
aspect of the tellers' own social lives, some terrifying potential, in the 
way they are accustomed to interact with each other, that they do not 
wish to acknowledge or confront, but also cannot help but talk about. 49 

In the Tiv case, what would that be? Clearly, Tiv did have a major 
problem with authority. They lived in a landscape dotted with com- 
pounds, each organized around a single older man with his numerous 
wives, children, and assorted hangers-on. Within each compound, that 
man had near-absolute authority. Outside there was no formal political 
structure, and Tiv were fiercely egalitarian. In other words: all men as- 
pired to become the masters of large families, but they were extremely 
suspicious of any form of mastery. Hardly surprising, then, that Tiv 
men were so ambivalent about the nature of power that they became 
convinced that the very qualities that allow a man to rise to legitimate 
prominence could, if taken just a little bit further, turn him into a mon- 
ster. 50 In fact, most Tiv seemed to assume that most male elders were 
witches, and that if a young person died, they were probably being paid 
off for a flesh-debt. 

But this still doesn't answer the one obvious question: Why is all 
this framed in terms of debt? 

Here a little history is in order. It would appear that the ancestors of 
the Tiv arrived in the Benue river valley and adjacent lands sometime 
around 1750 — a time when all of what's now Nigeria was being torn 
apart by the Atlantic slave trade. Early stories relate how the Tiv, dur- 
ing their migrations, used to paint their wives and children with what 
looked like smallpox scars, so that potential raiders would be afraid to 
carry them off. 51 They established themselves in a notoriously inacces- 
sible stretch of country and offered up ferocious defense against peri- 
odic raids from neighboring kingdoms to their north and west — with 
which they eventually came to a political rapprochement. 52 



The Tiv, then, were well aware of what was happening all around 
them. Consider, for example, the case of the copper bars whose use 
they were so careful to restrict, so as to avoid their becoming an all- 
purpose form of currency. 

Now, copper bars had been used for money in this part of Africa 
for centuries, and at least in some places, for ordinary commercial 
transactions, as well. It was easy enough to do: one simply snapped 
them apart into smaller pieces, or pulled some of them into thin wires, 
twisted those around to little loops, and one had perfectly serviceable 
small change for everyday market transactions. 53 Most of the ones cur- 
rent in Tivland since the late eighteenth century, on the other hand, 
were mass-produced in factories in Birmingham and imported through 
the port of Old Calabar at the mouth of the Cross River, by slave- 
traders based in Liverpool and Bristol. 54 In all the country adjoining 
the Cross River — that is, in the region directly to the south of the 
Tiv territory — copper bars were used as everyday currency. This was 
presumably how they entered Tivland; they were either carried in by 
pedlars from the Cross River or acquired by Tiv traders on expeditions 
abroad. All this, however, makes the fact that the Tiv refused to use 
copper bars as such a currency doubly significant. 

During the 1760s alone, perhaps a hundred thousand Africans were 
shipped down the Cross River to Calabar and nearby ports, where they 
were put in chains, placed on British, French, or other European ships, 
and shipped across the Atlantic — part of perhaps a million and a half 
exported from the Bight of Biafra during the whole period of the At- 
lantic slave trade. 55 Some of them had been captured in wars or raids, 
or simply kidnapped. The majority, though, were carried off because 
of debts. 

Here, though, I must explain something about the organization of 
the slave trade. 

The Atlantic Slave Trade as a whole was a gigantic network of 
credit arrangements. Ship-owners based in Liverpool or Bristol would 
acquire goods on easy credit terms from local wholesalers, expecting to 
make good by selling slaves (also on credit) to planters in the Antilles 
and America, with commission agents in the city of London ultimately 
financing the affair through the profits of the sugar and tobacco trade. 56 
Ship-owners would then transport their wares to African ports like 
Old Calabar. Calabar itself was the quintessential mercantile city-state, 
dominated by rich African merchants who dressed in European clothes, 
lived in European-style houses, and in some cases even sent their chil- 
dren to England to be educated. 



On arrival, European traders would negotiate the value of their 
cargoes in the copper bars that served as the currency of the port. In 
1698, a merchant aboard a ship called the Dragon noted the following 
prices he managed to establish for his wares: 

one bar iron 4 copper bars 

one bunch of beads 4 copper bars 

five rangoes 57 4 copper bars 

one basin No. 1 4 copper bars 

one tankard 3 copper bars 

one yard linen 1 copper bar 

six knives 1 copper bar 


one brass bell No. 1 3 copper bars 

By the height of the trade fifty years later, British ships were bring- 
ing in large quantities of cloth (both products of the newly created 
Manchester mills and calicoes from India), and iron and copper ware, 
along with incidental goods like beads, and also, for obvious reasons, 
substantial numbers of firearms.'' 9 The goods were then advanced to 
African merchants, again on credit, who assigned them to their own 
agents to move upstream. 

The obvious problem was how to secure the debt. The trade was 
an extraordinarily duplicitous and brutal business, and slave raiders 
were unlikely to be dependable credit risks — especially when dealing 
with foreign merchants who they might never see again. 60 As a result, 
a system quickly developed in which European captains would demand 
security in the form of pawns. 

The sort of "pawns" we are talking about here are clearly quite 
different from the kind we encountered among the Lele. In many of 
the kingdoms and trading towns of West Africa, the nature of pawn- 
ship appears to have already undergone profound changes by the time 
Europeans showed up on the scene around 1500 — it had become, effec- 
tively, a kind of debt peonage. Debtors would pledge family members 
as surety for loans; the pawns would then become dependents in the 
creditors' households, working their fields and tending to their house- 
hold chores — their persons acting as security while their labor, effec- 
tively, substituted for interest. 61 Pawns were not slaves; they were not, 
like slaves, cut off from their families; but neither were they precisely 
free. 62 In Calabar and other ports, masters of slaving ships, on advanc- 
ing goods to their African counterparts, soon developed the custom of 



demanding pawns as security — for instance, two of the merchants' own 
dependents for every three slaves to be delivered, preferably including 
at least one member of the merchants' families. 63 This was in practice 
not much different than demanding the surrender of hostages, and at 
times it created major political crises when captains, tired of waiting 
for delayed shipments, decided to take off with a cargo of pawns in- 

Upriver, debt pawns also played a major part in the trade. In one 
way, the area was a bit unusual. In most of West Africa, the trade ran 
through major kingdoms such as Dahomey or Asante to make wars 
and impose draconian punishments — one very common expedient for 
rulers was to manipulate the justice system, so that almost any crime 
came to be punishable by enslavement, or by death with the enslave- 
ment of one's wife and children, or by outrageously high fines which, 
if one could not pay them, would cause the defaulter and his family to 
be sold as slaves. In another way, it is unusually revealing, since the 
lack of any larger government structures made it easier to see what 
was really happening. The pervasive climate of violence led to the sys- 
tematic perversion of all the institutions of existing human economies, 
which were transformed into a gigantic apparatus of dehumanization 
and destruction. 

In the Cross River region, the trade seems to have seen two phases. 
The first was a period of absolute terror and utter chaos, in which 
raids were frequent, and anyone traveling alone risked being kidnapped 
by roving gangs of thugs and sold to Calabar. Before long, villages 
lay abandoned; many people fled into the forest; men would have to 
form armed parties to work the fields. 64 This period was relatively 
brief. The second began when representatives of local merchant soci- 
eties began to establish themselves in communities up and down the 
region, offering to restore order. The most famous of these was the 
Aro Confederacy, who called themselves, "Children of God." 65 Backed 
by heavily armed mercenaries and the prestige of their famous Oracle 
at Arochukwu, they established a new and notoriously harsh justice 
system. 66 Kidnappers were hunted down and themselves sold as slaves. 
Safety was restored to roads and farmsteads. At the same time, Aro 
collaborated with local elders to create a code of ritual laws and penal- 
ties so comprehensive and severe that everyone was at constant risk of 
falling afoul of them. 67 Anyone who violated one would be turned over 
to the Aro for transport to the coast, with their accuser receiving their 
price in copper bars. 68 According to some contemporary accounts, a 
man who simply disliked his wife and was in need of brass rods could 



always come up with some reason to sell her, and the village elders — 
who received a share of the profits — would almost invariably concur. 69 
The most ingenious trick of the merchant societies, though, was to 
assist in the dissemination of a secret society, called Ekpe. Ekpe was 
most famous for sponsoring magnificent masquerades and for initiat- 
ing its members into arcane mysteries, but it also acted as a secret 
mechanism for the enforcement of debts. 70 In Calabar itself, for ex- 
ample, the Ekpe society had access to a whole range of sanctions, 
starting with boycotts (all members were forbidden to conduct trade 
with a defaulting debtor), fines, seizure of property, arrest, and finally, 
execution — with the most hapless victims left tied to trees, their lower 
jaws removed, as a warning to others. 71 It was ingenious, particularly, 
because such societies always allowed anyone to buy in, rising though 
the nine initiatory grades if they could pay the fee — these also exacted, 
of course, in the brass rods the merchants themselves supplied. In Cala- 
bar, the fee schedule for each grade looked like this: 72 

In other words, it was quite expensive. But membership quickly 
became the chief mark of honor and distinction everywhere. Entry fees 
were no doubt less exorbitant in small, distant communities, but the 
effect was still the same: thousands ended up in debt to the merchants, 
whether for the fees required for joining, or for the trade goods they 
supplied (mostly cloth and metal put to use creating the gear and 
costumes for the Ekpe performances — debts that they thus themselves 
became responsible for enforcing on themselves. These debts, too, were 
regularly paid in people, ostensibly yielded up as pawns.) 

How did it work in practice? It appears to have varied a great deal 
from place to place. In the Afikpo district, on a remote part of the up- 
per Cross River, for instance, we read that everyday affairs — the acqui- 
sition of food, for example — was conducted, as among the Tiv, "with- 
out trade or the use of money." Brass rods, supplied by the merchant 
societies, were used to buy and sell slaves, but otherwise mostly as a 

i. Nyampi 
2. Oku Akana 

3. Brass 
4. Makanda 
5. Makara 

6. Mboko Mboko 

7. Bunko Abonko 
8. Mboko Nya Ekpo 

9. Ekpe 

50 boxes brass rods for each 
of the lower grades. 



social currency, "used for gifts and for payments in funerals, titles, and 
other ceremonies." 73 Most of those payments, titles, and ceremonies 
were tied to the secret societies that the merchants had also brought 
to the area. All this does sound a bit like the Tiv arrangement, but the 
presence of the merchants ensured that the effects were very different: 

In the old days, if anybody got into trouble or debt in the up- 
per parts of the Cross River, and wanted ready money, he used 
generally to "pledge" one or more of his children, or some 
other members of his family or household, to one of the Aku- 
nakuna traders who paid periodical visits to his village. Or he 
would make a raid on some neighboring village, seize a child, 
and sell him or her to the same willing purchaser. 74 

The passage only makes sense if one recognizes that debtors were 
also, owing to their membership in the secret societies, collectors. The 
seizing of a child is a reference to the local practice of "panyarring," 
current throughout West Africa, by which creditors despairing of repay- 
ment would simply sweep into the debtor's community with a group of 
armed men and seize anything — people, goods, domestic animals — that 
could be easily carried off, then hold it hostage as security. 75 It didn't 
matter if the people or goods had belonged to the debtor, or even the 
debtor's relatives. A neighbor's goats or children would do just as well, 
since the whole point was to bring social pressure on whoever owed 
the money. As William Bosman put it, "If the Debtor be an honest man 
and the Debt just, he immediately endeavours by the satisfaction of his 
Creditors to free his Countrymen." 76 It was actually a quite sensible 
expedient in an environment with no central authority, where people 
tended to feel an enormous sense of responsibility toward other mem- 
bers of their community and very little responsibility toward anyone 
else. In the case of the secret society cited above, the debtor would, 
presumably, be calling in his own debts — real or imagined — to those 
outside the organization, in order not to have to send off members of 
his own family. 77 

Such expedients were not always effective. Often debtors would be 
forced to pawn more and more of their own children or dependents, 
until finally there was no recourse but to pawn themselves. 78 And of 
course, at the height of the slave trade, "pawning" had become little 
more than a euphemism. The distinction between pawns and slaves 
had largely disappeared. Debtors, like their families before them, ended 
up turned over to the Aro, then to the British, and finally, shackled and 



chained, crowded into tiny slaving vessels and sent off to be sold on 
plantations across the sea. 79 

If the Tiv, then, were haunted by the vision of an insidious secret orga- 
nization that lured unsuspecting victims into debt traps, whereby they 
themselves became the enforcers of debts to be paid with the bodies 
of their children, and ultimately, themselves — one reason was because 
this was, literally happening to people who lived a few hundred miles 
away. Nor is the use of the phrase "flesh-debt" in any way inappropri- 
ate. Slave-traders might not have been reducing their victims to meat, 
but they were certainly reducing them to nothing more than bodies. To 
be a slave was to be plucked from one's family, kin, friends, and com- 
munity, stripped of one's name, identity, and dignity; of everything that 
made one a person rather than a mere human machine capable of un- 
derstanding orders. Neither were most slaves offered much opportunity 
to develop enduring human relations. Most that ended up in Caribbean 
or American plantations, though, were simply worked to death. 

What is remarkable is that all this was done, the bodies extracted, 
through the very mechanisms of the human economy, premised on the 
principle that human lives are the ultimate value, to which nothing 
could possibly compare. Instead, all the same institutions — fees for ini- 
tiations, means of calculating guilt and compensation, social currencies, 
debt pawnship — were turned into their opposite; the machinery was, as 
it were, thrown into reverse; and, as the Tiv also perceived, the gears 
and mechanisms designed for the creation of human beings collapsed 
on themselves and became the means for their destruction. 

I do not want to leave the reader with the impression that what I am 
describing here is in any way peculiar to Africa. One could find the 
exact same things happening wherever human economies came into 
contact with commercial ones (and particularly, commercial economies 
with advanced military technology and an insatiable demand for hu- 
man labor). 

Remarkably similar things can be observed throughout Southeast 
Asia, particularly amongst hill and island people living on the fringes of 
major kingdoms. As the premier historian of the region, Anthony Reid, 



has pointed out, labor throughout Southeast Asia has long been orga- 
nized above all through relations of debt bondage. 

Even in relatively simple societies little penetrated by money, 
there were ritual needs for substantial expenditures — the pay- 
ment of bride-price for marriage and the slaughter of a buffalo 
at the death of a family member. It is widely reported that such 
ritual needs are the most common reason why the poor become 
indebted to the rich . . . 80 

For instance, one practice, noted from Thailand to Sulawesi, is 
for a group of poor brothers to turn to a rich sponsor to pay for the 
expenses of one brother's marriage. He's then referred to as their "mas- 
ter." This is more like a patron-client relation than anything else: the 
brothers might be obliged to do the occasional odd job, or appear as 
his entourage on occasions when he has to make a good impression — 
not much more. Still, technically, he owns their children, and "can also 
repossess the wife he provided if his bondsmen fail to carry out his 
obligations." 81 

Elsewhere, we hear similar stories to those in Africa — of peasants 
pawning themselves or members of their families, or even gambling 
themselves into bondage; of principalities where penalties invariably 
took the form of heavy fines. "Frequently, of course, these fines could 
not be paid, and the condemned man, often accompanied by his depen- 
dants, became the bondsman of the ruler, of the injured party, or of 
whoever was able to pay his fine for him." 82 Reid insists that most of 
this was relatively innocuous — in fact, poor men might take out loans 
for the express purpose of becoming debtors to some wealthy patron, 
who could provide them with food during hard times, a roof, a wife. 
Clearly this was not "slavery" in the ordinary sense. That is, unless 
the patron decided to ship some of his dependents off to creditors of 
his own in some distant city like Majapahit or Ternate, whereupon 
they might find themselves toiling in some grandee's kitchen or pepper 
plantation like any other slave. 

It's important to point this out because one of the effects of the 
slave trade is that people who don't actually live in Africa are often 
left with an image of that continent as an irredeemably violent, savage 
place — an image that has had disastrous effects on those who do live 
there. It might be fitting, then, to consider the history of one place that 
is usually represented as the polar opposite: Bali, the famous "land of 
ten thousand temples" — an island often pictured in anthropological 
texts and tourist brochures as if it were inhabited exclusively by placid, 



dreamy artists who spend their days arranging flowers and practicing 
synchronized dance routines. 

In the seventeenth and eighteenth centuries, Bali had not yet ob- 
tained this reputation. At the time, it was still divided among a dozen 
tiny, squabbling kingdoms in an almost perpetual state of war. In fact, 
its reputation among the Dutch merchants and officials ensconced in 
nearby Java was almost exactly the opposite of what it is today. Ba- 
linese were considered a rude and violent people ruled by decadent, 
opium-addicted nobles whose wealth was based almost exclusively on 
their willingness to sell their subjects to foreigners as slaves. By the 
time the Dutch were fully in control in Java, Bali had been turned 
largely into a reservoir for the export of human beings — young Bali- 
nese women in particular being in great demand in cities through the 
region as both prostitutes and concubines. 83 As the island was drawn 
into the slave trade, almost the entire social and political system of the 
island was transformed into an apparatus for the forcible extraction 
of women. Even within villages, ordinary marriages took the form of 
"marriage by capture" — sometimes staged elopements, sometimes real 
forcible kidnappings, after which the kidnappers would pay a woman's 
family to let the matter drop. 84 If a woman was captured by someone 
genuinely important, though, no compensation would be offered. Even 
in the 1960s, elders recalled how attractive young women used to be 
hidden away by their parents, 

forbidden to bear towering offerings to temple festivals, lest 
they be espied by a royal scout and hustled into the closely 
protected female quarters of the palace, where the eyes of male 
visitors were restricted to foot level. For there was slim chance 
a girl would become a legitimate low-caste wife (penawing) of 
the raja . . . More likely after affording a few years' licentious 
satisfaction, she would degenerate into a slave-like servant. 85 

Or, if she did rise to such a position that the high-caste wives be- 
gan to see her as a rival, she might be either poisoned or shipped off 
overseas to end up servicing soldiers at some Chinese-run bordello in 
Jogjakarta, or changing bedpans in the house of a French plantation- 
owner in the Indian Ocean island of Reunion. 86 Meanwhile, royal law 
codes were rewritten in all the usual ways, with the exception that here, 
the force of law was directed above all and explicitly against women. 
Not only were criminals and debtors to be enslaved and deported, but 
any married man was granted the power to renounce his wife, and by 
doing so render her, automatically, property of the local ruler, to be 



disposed of as he wished. Even a woman whose husband died before 
she had produced male offspring would to be handed over to the palace 
to be sold abroad. 87 

As Adrian Vickers explains, even Bali's famous cockfights — so fa- 
miliar to any first-year anthropology student — were originally promot- 
ed by royal courts as a way of recruiting human merchandise: 

Kings even helped put people into debt by staging large cock- 
fights in their capitals. The passion and extravagance encour- 
aged by this exciting sport led many peasants to bet more than 
they could afford. As with any gambling, the hope of great 
wealth and the drama of a contest fuelled ambitions which 
few could afford and at the end of the day, when the last spur 
had sunk into the chest of the last rooster, many peasants had 
no home and family to return to. They, and their wives and 
children, would be sold to Java. 88 

Reflections on Violence 

I began this book by asking a question: How is it that moral obliga- 
tions between people come to be thought of as debts, and as a result, 
end up justifying behavior that would otherwise seem utterly immoral? 

I began this chapter by beginning to propose an answer: by making 
a distinction between commercial economies and what I call "human 
economies" — that is, those where money acts primarily as a social 
currency, to create, maintain, or sever relations between people rather 
than to purchase things. As Rospabe so cogently demonstrated, it is 
the peculiar quality of such social currencies that they are never quite 
equivalent to people. If anything, they are a constant reminder that 
human beings can never be equivalent to anything — even, ultimately, 
to one another. This is the profound truth of the blood-feud. No one 
can ever really forgive the man who killed his brother because every 
brother is unique. Nothing could substitute — not even some other man 
given the same name and status as your brother, or a concubine who 
will bear a son who will be named after your brother, or a ghost-wife 
who will bear a child pledged to someday avenge his death. 

In a human economy, each person is unique, and of incompa- 
rable value, because each is a unique nexus of relations with others. 
A woman may be a daughter, sister, lover, rival, companion, mother, 
age-mate, and mentor to many different people in different ways. Each 
relation is unique, even in a society in which they are sustained through 



the constant giving back and forth of generic objects such as raffia 
cloth or bundles of copper wire. In one sense, those objects make one 
who one is — a fact illustrated by the way the objects used as social 
currencies are so often things otherwise used to clothe or decorate the 
human body, that help make one who one is in the eyes of others. Still, 
just as our clothes don't really make us who we are, a relationship kept 
alive by the giving and taking of raffia is always something more than 
that. 89 This means that the raffia, in turn, is always something less. 
This is why I think Rospabe was right to emphasize the fact that in 
such economies, money can never substitute for a person: money is a 
way of acknowledging that very fact, that the debt cannot be paid. But 
even the notion that a person can substitute for a person, that one sis- 
ter can somehow be equated with another, is by no means self-evident. 
In this sense, the term "human economy" is double-edged. These are, 
after all, economies: that is, systems of exchange in which qualities are 
reduced to quantities, allowing calculations of gain and loss — even if 
those calculations are simply a matter (as in sister exchange) of i equals 
i, or (as in the feud) of i minus i equals o. 

How is this calculability effectuated? How does it become pos- 
sible to treat people as if they are identical? The Lele example gave 
us a hint: to make a human being an object of exchange, one woman 
equivalent to another for example, requires first of all ripping her from 
her context; that is, tearing her away from that web of relations that 
makes her the unique conflux of relations that she is, and thus, into 
a generic value capable of being added and subtracted and used as a 
means to measure debt. This requires a certain violence. To make her 
equivalent to a bar of camwood takes even more violence, and it takes 
an enormous amount of sustained and systematic violence to rip her so 
completely from her context that she becomes a slave. 

I should be clear here. I am not using the word "violence" meta- 
phorically. I am not speaking merely of conceptual violence, but of the 
literal threat of broken bones and bruised flesh; of punches and kicks; 
in much the same way that when the ancient Hebrews spoke of their 
daughters in "bondage," they were not being poetic, but talking about 
literal ropes and chains. 

Most of us don't like to think much about violence. Those lucky 
enough to live relatively comfortable, secure lives in modern cities tend 
either to act as if it does not exist or, when reminded that it does, to 
write off the larger world "out there" as a terrible, brutal place, with 
not much that can be done to help it. Either instinct allows us not to 
have to think about the degree to which even our own daily existence 
is defined by violence or at least the threat of violence (as I've often 



noted, think about what would happen if you were to insist on your 
right to enter a university library without a properly validated ID), and 
to overstate the importance — or at least the frequency — of things like 
war, terrorism, and violent crime. The role of force in providing the 
framework for human relations is simply more explicit in what we call 
"traditional societies" — even if in many, actual physical assault by one 
human on another occurs less often than in our own. Here's a story 
from the Bunyoro kingdom, in East Africa: 

Once a man moved into a new village. He wanted to find out 
what his neighbors were like, so in the middle of the night he 
pretended to beat his wife very severely, to see if the neighbors 
would come and remonstrate with him. But he did not really 
beat her; instead he beat a goatskin, while his wife screamed 
and cried out that he was killing her. Nobody came, and the 
very next day the man and his wife packed up and left that vil- 
lage and went to find some other place to live. 90 

The point is obvious. In a proper village, the neighbors should have 
rushed in, held him back, demanded to know what the woman could 
possibly have done to deserve such treatment. The dispute would be- 
come a collective concern that ended in some sort of collective settle- 
ment. This is how people ought to live. No reasonable man or woman 
would want to live in a place where neighbors don't look after one 

In its own way it's a revealing story, charming even, but one must 
still ask: How would a community — even one the man in the sto- 
ry would have considered a proper community — have reacted if they 
thought she was beating him} 91 I think we all know the answer. The 
first case would have led to concern; the second would have led to ridi- 
cule. In Europe in the sixteenth and seventeenth centuries, young vil- 
lagers used to put on satirical skits making fun of husbands beaten by 
their wives, even to parade them about the town mounted backwards 
on an ass for everyone to jeer at. 92 No African society, as far as I know, 
went quite this far. (Neither did any African society burn as many 
witches — Western Europe at that time was a particularly savage place.) 
Yet as in most of the world, the assumption that the one sort of brutal- 
ity was at least potentially legitimate, and that the other was not, was 
the framework within which relations between the sexes took place. 93 

What I want to emphasize is that there is a direct relation be- 
tween that fact and the possibility of trading lives for one another. 



Anthropologists are fond of making diagrams to represent preferential 
marriage patterns. Sometimes, these diagrams can be quite beautiful: 94 

Ideal pattern of bilateral cross-cousin marriage 

Sometimes they merely have a certain elegant simplicity, as in this 
diagram on an instance of Tiv sister exhange: 95 




i — i — 





A B 



A A 

1 1 


1 | 

Human beings, left to follow their own desires, rarely arrange 
themselves in symmetrical patterns. Such symmetry tends to be bought 
at a terrible human price. In the Tiv case, Akiga is actually willing to 
describe it: 

Under the old system an elder who had a ward could always 
marry a young girl, however senile he might be, even if he 



were a leper with no hands or feet; no girl would dare to re- 
fuse him. If another man were attracted by his ward he would 
take his own and give her to the old man by force, in order 
to make an exchange. The girl had to go with the old man, 
sorrowfully carrying his goat-skin bag. If she ran back to her 
home her owner caught her and beat her, then bound her and 
brought her back to the elder. The old man was pleased, and 
grinned till he showed his blackened molars. "Wherever you 
go," he told her, "you will be brought back here to me; so 
stop worrying, and settle down as my wife." The girl fretted, 
till she wished the earth might swallow her. Some women even 
stabbed themselves to death when they were given to an old 
man against their will; but in spite of all, the Tiv did not care. 96 

The last line says everything. Citing it might seem unfair (the Tiv 
did, evidently, care enough to elect Akiga to be their first parliamen- 
tary representative, knowing he supported legislation to outlaw such 
practices), but it serves nicely to bring home the real point: that certain 
sorts of violence were considered morally acceptable. 97 No neighbors 
would rush in to intervene if a guardian was beating a runaway ward. 
Or if they did, it would be to insist that he use more gentle means to 
return her to her rightful husband. And it was because women knew 
that this is how their neighbors, or even parents, would react that "ex- 
change marriage" was possible. 

This is what I mean by people "ripped from their contexts." 

The Lele were fortunate enough to have largely escaped the devasta- 
tions of the slave trade; the Tiv were sitting practically on the teeth 
of the shark, and they had to make heroic efforts to keep the threat 
at bay. Nonetheless, in both cases there were mechanisms for forcibly 
removing young women from their homes, and it was precisely this 
that made them exchangeable — though in each case too, a principle 
stipulated that a woman could only be exchanged for another woman. 
The few exceptions, when women could be exchanged for other things, 
emerged directly from war and slavery — that is, when the level of vio- 
lence was significantly ratcheted up. 

The slave trade, of course, represented violence on an entirely dif- 
ferent scale. We are speaking here of destruction of genocidal pro- 
portions, in world-historic terms, comparable only to events like the 
destruction of New World civilizations or the Holocaust. Neither do 



I mean in any way to blame the victims: we need only imagine what 
would be likely to happen in our own society if a group of space aliens 
suddenly appeared, armed with undefeatable military technology, infi- 
nite wealth, and no recognizable morality — and announced that they 
were willing to pay a million dollars each for human workers, no ques- 
tions asked. There will always be at least a handful of people unscru- 
pulous enough to take advantage of such a situation — and a handful 
is all it takes. 

Groups like the Aro Confederacy represent an all-too-familiar 
strategy, deployed by fascists, mafias, and right-wing gangsters every- 
where: first unleash the criminal violence of an unlimited market, in 
which everything is for sale and the price of life becomes extremely 
cheap; then step in, offering to restore a certain measure of order — 
though one which in its very harshness leaves all the most profitable 
aspects of the earlier chaos intact. The violence is preserved within the 
structure of the law. Such mafias, too, almost invariably end up enforc- 
ing a strict code of honor in which morality becomes above all a matter 
of paying one's debts. 

Were this a different book, I might reflect here on the curious par- 
allels between the Cross River societies and Bali, both of which saw 
a magnificent outburst of artistic creativity (Cross River Ekpe masks 
were a major influence on Picasso) that took the form, above all, of 
an efflorescence of theatrical performance, replete with intricate music, 
splendid costumes, and stylized dance — a kind of alternative political 
order as imaginary spectacle — at the exact moment that ordinary life 
became a game of constant peril in which any misstep might lead to 
being sent away. What was the link between the two? It's an interesting 
question, but not one we can really answer here. For present purposes, 
the crucial question has to be: How common was this? The African 
slave trade was, as I mentioned, an unprecedented catastrophe, but 
commercial economies had already been extracting slaves from human 
economies for thousands of years. It is a practice as old as civilization. 
The question I want to ask is: To what degree is it actually constitutive 
of civilization itself? 

I am not speaking strictly of slavery here, but of that process that 
dislodges people from the webs of mutual commitment, shared history, 
and collective responsibility that make them what they are, so as to 
make them exchangeable — that is, to make it possible to make them 
subject to the logic of debt. Slavery is just the logical end-point, the 
most extreme form of such disentanglement. But for that reason it pro- 
vides us with a window on the process as a whole. What's more, ow- 
ing to its historical role, slavery has shaped our basic assumptions and 



institutions in ways that we are no longer aware of and whose influ- 
ence we would probably never wish to acknowledge if we were. If we 
have become a debt society, it is because the legacy of war, conquest, 
and slavery has never completely gone away. It's still there, lodged in 
our most intimate conceptions of honor, property, even freedom. It's 
just that we can no longer see that it's there. 

In the next chapter, I will begin to describe how this happened. 

Chapter Seven 



ur s [HAR]: n., liver; spleen; heart, soul; 
bulk, main body; foundation; loan; 
obligation; interest; surplus, profit; 
interest-bearing debt; repayment; slave- 

— early Sumerian dictionary 1 

It is just to give each what is owed. 

— Simonides 

IN THE LAST CHAPTER, I offered a glimpse of how human econo- 
mies, with their social currencies — which are used to measure, assess, 
and maintain relationships between people, and only perhaps inciden- 
tally to acquire material goods — might be transformed into something 
else. What we discovered was that we cannot begin to think about such 
questions without taking into account the role of sheer physical vio- 
lence. In the case of the African slave trade, this was primarily violence 
imposed from outside. Nonetheless, its very suddenness, its very brutal- 
ity, provides us with a sort of freeze-frame of a process that must have 
occurred in a much slower, more haphazard fashion in other times and 
places. This is because there is every reason to believe that slavery, with 
its unique ability to rip human beings from their contexts, to turn them 
into abstractions, played a key role in the rise of markets everywhere. 

What happens, then, when the same process happens more slowly? 
It would seem that much of this history is permanently lost — since in 
both the ancient Middle East and the ancient Mediterranean, most of 
the really critical moments seem to have occurred just before the ad- 
vent of written records. Still, the broad outlines can be reconstructed. 



The best way to do so, I believe, is to start from a single, odd, vexed 
concept: the concept of honor, which can be treated as a kind of arti- 
fact, or even as a hieroglyphic, a fragment preserved from history that 
seems to compress into itself the answer to almost everything we've 
been trying to understand. On the one hand, violence: men who live by 
violence, whether soldiers or gangsters, are almost invariably obsessed 
with honor, and assaults on honor are considered the most obvious 
justification for acts of violence. On the other, debt. We speak both of 
debts of honor, and honoring one's debts; in fact, the transition from 
one to the other provides the best clue to how debts emerge from obli- 
gations; even as the notion of honor seemed to echo a defiant insistence 
that financial debts are not really the most important ones; an echo, 
here, of arguments that, like those in the Vedas and the Bible, go back 
to the very dawn of the market itself. Even more disturbingly, since the 
notion of honor makes no sense without the possibility of degradation, 
reconstructing this history reveals how much our basic concepts of 
freedom and morality took shape within institutions — notably, but not 
only, slavery — that we'd sooner not have to think about at all. 

To underscore some of the paradoxes surrounding the concept and 
bring home what's really at stake here, let us consider the story of one 
man who survived the Middle Passage: Olaudah Equiano, born some- 
time around 1745 in a rural community somewhere within the confines 
of the Kingdom of Benin. Kidnapped from his home at the age of 
eleven, Equiano was eventually sold to British slavers operating in the 
Bight of Biafra, from whence he was conveyed first to Barbados, then 
to a plantation in colonial Virginia. 

Equiano's further adventures — and there were many — are narrated 
in his autobiography, The Interesting Narrative of the Life of Olau- 
dah Equiano: or, Gustavus Vassa, the African, published in 1789. After 
spending much of the Seven Years' War hauling gunpowder on a Brit- 
ish frigate, he was promised his freedom, denied his freedom, sold to 
several owners — who regularly lied to him, promising his freedom, and 
then broke their word — until he passed into the hands of a Quaker 
merchant in Pennsylvania, who eventually allowed him to purchase his 
freedom. Over the course of his later years he was to become a success- 
ful merchant in his own right, a best-selling author, an Arctic explorer, 
and eventually, one of the leading voices of English Abolitionism. His 
eloquence and the power of his life story played significant parts in the 
movement that led to the British abolition of the slave trade in 1807. 



Readers of Equiano's book are often troubled by one aspect of the 
story: that for most of his early life, he was not opposed to the institu- 
tion of slavery. At one point, while saving money to buy his freedom, 
he even briefly took a job that involved purchasing slaves in Africa. 
Equiano only came around to an abolitionist position after converting 
to Methodism and falling in with religious activists against the trade. 
Many have asked: Why did it take him so long? Surely if anyone had 
reason to understand the evils of slavery, he did. 

The answer seems, oddly, to lie in the man's very integrity. One 
thing that comes through strikingly in the book is that this was not 
only a man of endless resourcefulness and determination, but above 
all, a man of honor. Yet this created a terrible dilemma. To be made 
a slave is to be stripped of any possible honor. Equiano wished above 
all else to regain what had been taken from him. The problem is that 
honor is, by definition, something that exists in the eyes of others. To 
be able to recover it, then, a slave must necessarily adopt the rules and 
standards of the society that surrounds him, and this means that, in 
practice at least, he cannot absolutely reject the institutions that de- 
prived him of his honor in the first place. 

It strikes me that this experience — of only being able to restore 
one's lost honor, to regain the ability to act with integrity by acting 
in accord with the terms of a system that one knows, through deeply 
traumatic personal experience, to be utterly unjust — is itself one of 
the most profoundly violent aspects of slavery. It is another example, 
perhaps, of the need to argue in the master's language, but here taken 
to insidious extremes. 

All societies based on slavery tend to be marked by this agonizing 
double consciousness: the awareness that the highest things one has to 
strive for are also, ultimately, wrong; but at the same time, the feeling 
that this is simply the nature of reality. This might help explain why 
throughout most of history, when slaves did rebel against their mas- 
ters, they rarely rebelled against slavery itself. But the flip side of this is 
that even slave-owners seemed to feel that the whole arrangement was 
somehow fundamentally perverse or unnatural. First-year Roman law 
students, for instance, were made to memorize the following definition: 


is an institution according to the law of nations whereby 
one person falls under the property rights of another, contrary 
to nature. 2 



At the very least, there was always seen to be something disrep- 
utable and ugly about slavery. Anyone too close to it was tainted. 
Slave-traders particularly were scorned as inhuman brutes. Throughout 
history, moral justifications for slavery are rarely taken particularly 
seriously even by those who espouse them. For most of human history, 
most people saw slavery much as we see war: a tawdry business, to be 
sure, but one would have to be naive indeed to imagine it could simply 
be eliminated. 

Honor Is Surplus Dignity 

So what is slavery? I've already begun to suggest an answer in the last 
chapter. Slavery is the ultimate form of being ripped from one's con- 
text, and thus from all the social relationships that make one a human 
being. Another way to put this is that the slave is, in a very real sense, 

This was the conclusion of the first scholar to carry out a broad 
historical survey of the institution, an Egyptian sociologist named Ali 
'Abd al-Wahid Wafi, in Paris in 1931. 3 Everywhere, he observes, from 
the ancient world to then-present-day South America, one finds the 
same list of possible ways whereby a free person might be reduced to 

1) By the law of force 

a. By surrender or capture in war 

b. By being the victim of raiding or kidnapping 

2) As legal punishment for crimes (including debt) 

3) Through paternal authority (a father's sale of his children) 

4) Through the voluntary sale of one's self 4 

Everywhere, too, capture in war is considered the only way that 
is considered absolutely legitimate. All the others were surrounded 
by moral problems. Kidnapping was obviously criminal, and parents 
would not sell children except under desperate circumstances. 5 We read 
of famines in China so severe that thousands of poor men would cas- 
trate themselves, in the hope that they might sell themselves as eunuchs 
at court — but this was also seen as the sign of total social breakdown. 6 
Even the judicial process could easily be corrupted, as the ancients were 
well aware — especially when it came to enslavement for debt. 

On one level, al-Wahid's argument is just an extended apologia for 
the role of slavery in Islam — widely criticized, since Islamic law never 



eliminated slavery, even when the institution largely vanished in the 
rest of the Medieval world. True, he argues, Mohammed did not forbid 
the practice, but still, the early Caliphate was the first government we 
know of that actually succeeded in eliminating all these practices (judi- 
cial abuse, kidnappings, the sale of offspring) that had been recognized 
as social problems for thousands of years, and to limit slavery strictly 
to prisoners of war. 

The book's most enduring contribution, though, lay simply in ask- 
ing: What do all these circumstances have in common? Al-Wahid's 
answer is striking in its simplicity: one becomes a slave in situations 
where one would otherwise have died. This is obvious in the case of 
war: in the ancient world, the victor was assumed to have total power 
over the vanquished, including their women and children; all of them 
could be simply massacred. Similarly, he argued, criminals were con- 
demned to slavery only for capital crimes, and those who sold them- 
selves, or their children, normally faced starvation. 7 

This is not just to say, though, that a slave was seen as owing his 
master his life since he would otherwise be dead. 8 Perhaps this was true 
at the moment of his or her enslavement. But after that, a slave could 
not owe debts, because in almost every important sense, a slave was 
dead. In Roman law, this was quite explicit. If a Roman soldier was 
captured and lost his liberty, his family was expected to read his will 
and dispose of his possessions. Should he later regain his freedom, he 
would have to start over, even to the point of remarrying the woman 
who was now considered his widow. 9 

In West Africa, according to one French anthropologist, the same 
principles applied: 

Once he had been finally removed from his own milieu through 
capture the slave was considered as socially dead, just as if he 
had been vanquished and killed in combat. Among the Mande, 
at one time, prisoners of war brought home by the conquerors 
were offered dege (millet and milk porridge) — because it was 
held that a man should not die on an empty stomach — and 
then presented with their arms so that they could kill them- 
selves. Anyone who refused was slapped on the face by his 
abductor and kept as a captive: he had accepted the contempt 
which deprived him of personality. 10 

Tiv horror stories about men who are dead but do not know it 
or who are brought back from the grave to serve their murderers, and 



Haitian zombie stories, all seem to play on this essential horror of slav- 
ery: the fact that it's a kind of living death. 

In a book called Slavery and Social Death — surely the most pro- 
found comparative study of the institution yet written — Orlando Pat- 
terson works out exactly what it has meant to be so completely and 
absolutely ripped from one's context. 11 First of all, he emphasizes, slav- 
ery is unlike any other form of human relation because it is not a 
moral relation. Slave-owners might dress it up in all sorts of legalistic 
or paternalistic language, but really this is just window-dressing and no 
one really believes it; really, it is a relation based purely on violence; 
a slave must obey because if he doesn't, he can be beaten, tortured, or 
killed, and everyone is perfectly well aware of this. Second of all, being 
socially dead means that a slave has no binding moral relations with 
anyone else: he is alienated from his ancestors, community, family, 
clan, city; he cannot make contracts or meaningful promises, except at 
the whim of his master; even if he acquires a family, it can be broken 
up at any time. The relation of pure force that attached him to his mas- 
ter was hence the only human relationship that ultimately mattered. As 
a result — and this is the third essential element — the slave's situation 
was one of utter degradation. Hence the Mande warrior's slap: the 
captive, having refused his one final chance to save his honor by kill- 
ing himself, must recognize that he will now be considered an entirely 
contemptible being. 12 

Yet at the same time, this ability to strip others of their dignity 
becomes, for the master, the foundation of his honor. As Patterson 
notes, there have been places — the Islamic world affords numerous 
examples — where slaves are not even put to work for profit; instead, 
rich men make a point of surrounding themselves with battalions of 
slave retainers simply for reasons of status, as tokens of their magnifi- 
cence and nothing else. 

It seems to me that this is precisely what gives honor its notori- 
ously fragile quality. Men of honor tend to combine a sense of total 
ease and self-assurance, which comes with the habit of command, with 
a notorious jumpiness, a heightened sensitivity to slights and insults, 
the feeling that a man (and it is almost always a man) is somehow 
reduced, humiliated, if any "debt of honor" is allowed to go unpaid. 
This is because honor is not the same as dignity. One might even say: 
honor is surplus dignity. It is that heightened consciousness of power, 
and its dangers, that comes from having stripped away the power and 
dignity of others; or at the very least, from the knowledge that one 
is capable of doing so. At its simplest, honor is that excess dignity 
that must be defended with the knife or sword (violent men, as we 



all know, are almost invariably obsessed with honor). Hence the war- 
rior's ethos, where almost anything that could possibly be seen as a 
sign of disrespect — in inappropriate word, an inappropriate glance — is 
considered a challenge, or can be treated as such. Yet even where overt 
violence has largely been put out of the picture, wherever honor is at 
issue, it comes with a sense that dignity can be lost, and therefore must 
be constantly defended. 

The result is that to this day, "honor" has two contradictory mean- 
ings. On the one hand, we can speak of honor as simple integrity. 
Decent people honor their commitments. This is clearly what "honor" 
meant for Equiano: to be an honorable man meant to be one who 
speaks the truth, obeys the law, keeps his promises, is fair and con- 
scientious in his commercial dealings. 13 His problem was that honor 
simultaneously meant something else, which had everything to do with 
the kind of violence required to reduce human beings to commodities 
to begin with. 

The reader might be asking: But what does all this have to do with 
the origins of money? The answer is, surprisingly: everything. Some of 
the most genuinely archaic forms of money we know about appear to 
have been used precisely as measures of honor and degradation: that is, 
the value of money was, ultimately, the value of the power to turn oth- 
ers into money. The curious puzzle of the cumal — the slave-girl money 
of medieval Ireland — would appear to be a dramatic illustration. 

Honor Price (Early Medieval Ireland) 

For much of its early history, Ireland's situation was not very different 
than that in many of the African societies we looked at in the end of 
the last chapter. It was a human economy perched uncomfortably on 
the fringe of an expanding commercial one. What's more, at certain 
periods there was a very lively slave trade. As one historian put it, 
"Ireland has no mineral wealth, and foreign luxury goods could be 
bought by Irish kings mainly for two export goods, cattle and peo- 
ple." 14 Hardly surprising, perhaps, that cattle and people were the two 
major denominations of the currency. Still, by the time our earliest re- 
cords kick in, around 600AD, the slave trade appears to have died off, 
and slavery itself was a waning institution, coming under severe disap- 
proval from the Church. 15 Why, then, were cumal still being used as 
units of account, to tally up debts that were actually paid out in cows, 
and in cups and brooches and other objects made of silver, or, in the 



case of minor transactions, sacks of wheat or oats? And there's an even 
more obvious question: Why women'! There were plenty of male slaves 
in early Ireland, yet no one seems ever to have used them as money. 

Most of what we know about the economy of early Medieval 
Ireland comes from legal sources — a series of law codes, drawn up by 
a powerful class of jurists, dating roughly from the seventh to ninth 
centuries ad. These, however, are exceptionally rich. Ireland at that 
time was still very much a human economy. It was also a very rural 
one: people lived in scattered homesteads, not unlike the Tiv, growing 
wheat and tending cattle. The closest there were to towns were a few 
concentrations around monasteries. There appears to have been a near 
total absence of markets, except for a few on the coast — presumably, 
mainly slave or cattle markets — frequented by foreign ships. 16 

As a result, money was employed almost exclusively for social 
purposes: gifts; fees to craftsmen, doctors, poets, judges, and entertain- 
ers; various feudal payments (lords gave gifts of cattle to clients who 
then had to regularly supply them with food). The authors of the law 
codes didn't even know how to put a price on most goods of ordinary 
use — pitchers, pillows, chisels, slabs of bacon, and the like; no one 
seems ever to have paid money for them. 17 Food was shared in families 
or delivered to feudal superiors, who laid it out in sumptuous feasts 
for friends, rivals, and retainers. Anyone needing a tool or furniture or 
clothing either went to a kinsman with the relevant craft skills or paid 
someone to make it. The objects themselves were not for sale. Kings, 
in turn, assigned tasks to different clans: this one was to provide them 
with leather, this one poets, this one shields . . . precisely the sort of un- 
wieldy arrangement that markets were later developed to get around. 18 

Money could be loaned. There was a highly complex system of 
pledges and sureties to guarantee that debtors delivered what they 
owed. Mainly, though, it was used for paying fines. These fines are 
endlessly and meticulously elaborated in the codes, but what really 
strikes the contemporary observer is that they were carefully graded by 
rank. This is true of almost all the "Barbarian Law Codes" — the size 
of the penalties usually has at least as much do with the status of the 
victim as it does with the nature of the injury — but only in Ireland were 
things mapped out quite so systematically. 

The key to the system was a notion of honor: literally "face." 19 
One's honor was the esteem one had in the eyes of others, one's hon- 
esty, integrity, and character, but also one's power, in the sense of the 
ability to protect oneself, and one's family and followers, from any 
sort of degradation or insult. Those who had the highest degree of 
honor were literally sacred beings: their persons and possessions were 



sacrosanct. What was so unusual about Celtic systems — and the Irish 
one went further with this than any other — was that honor could be 
precisely quantified. Every free person had his or her "honor price": the 
price that one had to pay for an insult to the person's dignity. These 
varied. The honor price of a king, for instance, was seven cumal, or 
seven slave girls — this was the standard honor price for any sacred be- 
ing, the same as a bishop or master poet. Since (as all sources hasten to 
point out) slave girls were not normally paid as such, this would mean, 
in the case of an insult to such a person's dignity, one would have to 
pay twenty-one milk cows or twenty-one ounces of silver. 20 The honor 
price of a wealthy peasant was two and a half cows, of a minor lord, 
that, plus half a cow additionally for each of his free dependents — and 
since a lord, to remain a lord, had to have at least five of these, that 
brought him up to at least five cows total. 21 

Honor price is not to be confused with wergeld — the actual price 
of a man or woman's life. If one killed a man, one paid goods to the 
value of seven cumals, in recompense for killing him, to which one 
then added his honor price, for having offended against his dignity (by 
killing him). Interestingly, only in the case of a king are the blood price 
and his honor price the same. 

There were also payments for injury: if one wounds a man's cheek, 
one pays his honor price plus the price of the injury. (A blow to the 
face was, for obvious reasons, particularly egregious.) The problem 
was how to calculate the injury, since this varied according to both 
the physical damage and status of the injured party. Here, Irish jurists 
developed the ingenious expedient of measuring different wounds with 
different varieties of grain: a cut on the king's cheek was measured in 
grains of wheat, on that of a substantial farmer in oats, on that of a 
smallholder merely in peas. One cow was paid for each. 22 Similarly, 
if one stole, say, a man's brooch or pig, one had to pay back three 
brooches or three pigs — plus his honor price, for having violated the 
sanctity of his homestead. Attacking a peasant under the protection of 
a lord was the same as raping a man's wife or daughter, a violation 
of the honor not of the victim, but of the man who should have been 
able to protect them. 

Finally, one had to pay the honor price if one simply insulted 
someone of any importance: say, by turning the person away at a feast, 
inventing a particularly embarrassing nickname (at least, if it caught 
on), or humiliating the person through the use of satire. 23 Mockery 
was a refined art in Medieval Ireland, and poets were considered close 
to magicians: it was said that a talented satirist could rhyme rats to 
death, or at the very least, raise blisters on the faces of victims. Any 



man publicly mocked would have no choice but to defend his honor; 
and, in Medieval Ireland, the value of that honor was precisely defined. 

I should note that while twenty-one cows might not seem like 
much when we are dealing with kings, Ireland at the time had about 
150 kings. 24 Most had only a couple of thousand subjects, though there 
were also higher-ranking, provincial kings for whom the honor price 
was double. 25 What's more, since the legal system was completely sepa- 
rate from the political one, jurists, in theory, had the right the demote 
anyone — including a king — who had committed a dishonorable act. If 
a nobleman turned a worthy man away from his door or feast, shel- 
tered a fugitive, or ate steak from an obviously stolen cow, or even if 
he allowed himself to be satirized and did not take the offending poet 
to court, his price could be lowered to that of a commoner. But the 
same was true of a king who ran away in battle, or abused his powers, 
or even was caught working in the fields or otherwise engaging in tasks 
beneath his dignity. A king who did something utterly outrageous — 
murdered one of his own relatives, for example — might end up with no 
honor price at all, which meant not that people could say anything they 
liked about the king, without fear of recompense, but that he couldn't 
stand as surety or witness in court, as one's oath and standing in law 
was also determined by one's honor price. This didn't happen often, 
but it did happen, and legal wisdom made sure to remind people of it: 
the list, contained in one famous legal text, of the "seven kings who 
lost their honor price," was meant to ensure that everyone remembered 
that no matter how sacred and powerful, anyone could fall. 

What's unusual about the Irish material is that it's all spelled out 
so clearly. This is partly because Irish law codes were the work of a 
class of legal specialists who seem to have turned the whole thing al- 
most into a form of entertainment, devoting endless hours to coming 
up with every possible abstract possibility. Some of the provisos are so 
whimsical ("if stung by another man's bee, one must calculate the ex- 
tent of the injury, but also, if one swatted it in the process, subtract the 
replacement value of the bee") that one has to assume they were simply 
jokes. Still, as a result, the moral logic that lies behind any elaborate 
code of honor is laid out here in startling honesty. What about women? 
A free woman was honored at precisely 50 percent of the price of her 
nearest male relative (her father, if alive; if not, her husband). If she 
was dishonored, her price was payable to that relative. Unless, that 
is, she was an independent landholder. In that case, her honor price 
was the same as that of a man. And unless she was a woman of easy 
virtue, in which case it was zero, since she had no honor to outrage. 
What about marriage? A suitor paid the value of the wife's honor to 



her father and thus became its guardian. What about serfs? The same 
principle applied: when a lord acquired a serf, he bought out that 
man's honor price, presenting him with its equivalent in cows. From 
that moment on, if anyone insulted or injured the serf, it was seen an 
attack on the lord's honor, and it was up to the lord to collect the at- 
tendant fees. Meanwhile the lord's honor price was notched upward 
as a result of gathering another dependent: in other words, he literally 
absorbs his new vassal's honor into his own. 26 

All this, in turn, makes it possible to understand both something 
of the nature of honor, and why slave girls were kept as units for 
reckoning debts of honor even at a time when — owing no doubt to 
church influence — they no longer actually changed hands. At first sight 
it might seem strange that the honor of a nobleman or king should be 
measured in slaves, since slaves were human beings whose honor was 
zero. But if one's honor is ultimately founded on one's ability to extract 
the honor of others, it makes perfect sense. The value of a slave is that 
of the honor that has been extracted from them. 

Sometimes, one comes on a single haphazard detail that gives the 
game away. In this case it comes not from Ireland but from the Di- 
metian Code in Wales, written somewhat later but operating on much 
the same principles. At one point, after listing the honors due to the 
seven holy sees of the Kingdom of Dyfed, whose bishops and abbots 
were the most exalted and sacred creatures in the kingdom, the text 
specifies that 

Whoever draws blood from an abbot of any one of those prin- 
cipal seats before mentioned, let him pay seven pounds; and a 
female of his kindred to be a washerwoman, as a disgrace to 
the kindred, and to serve as a memorial to the payment of the 
honor price. 27 

A washerwoman was the lowest of servants, and the one turned 
over in this case was to serve for life. She was, in effect, reduced to 
slavery. Her permanent disgrace was the restoration of the abbot's 
honor. While we cannot know if some similar institution once lay be- 
hind the habit of reckoning the honor of Irish "sacred" beings in slave- 
women, the principle is clearly the same. Honor is a zero-sum game. A 
man's ability to protect the women of his family is an essential part of 
that honor. Therefore, forcing him to surrender a woman of his family 
to perform menial and degrading chores in another's household is the 
ultimate blow to his honor. This, in turn, makes it the ultimate reaf- 
firmation of the honor of he who takes it away. 



What makes Medieval Irish laws seem so peculiar from our perspective 
is that their exponents had not the slightest discomfort with putting 
an exact monetary price on human dignity. For us, the notion that the 
sanctity of a priest or the majesty of a king could be held equivalent to 
a million fried eggs or a hundred thousand haircuts is simply bizarre. 
These are precisely the things that ought to be considered beyond all 
possibility of quantification. If Medieval Irish jurists felt otherwise, 
it was because people at that time did not use money to buy eggs or 
haircuts. 28 It was the fact that it was still a human economy, in which 
money was used for social purposes, that it was possible to create such 
an intricate system whereby it was possible not just to measure but to 
add and subtract specific quantities of human dignity — and in doing so, 
provide us with a unique window into the true nature of honor itself. 

The obvious question is: What happens to such an economy when 
people do begin to use the same money used to measure dignity to 
buy eggs and haircuts? As the history of ancient Mesopotamia and 
the Mediterranean world reveals, the result was a profound — and 
enduring — moral crisis. 

Mesopotamia (The Origins of Patriarchy) 

In ancient Greek, the word for "honor" was time. In Homer's time, the 
term appears to have been used much like the Irish term "honor price": 
it referred both to the glory of the warrior and the compensation paid 
as damages in case of injury or insult. Yet with the rise of markets 
over the next several centuries, the meaning of the word time began to 
change. On the one hand, it became the word for "price" — as in, the 
price of something one buys in the market. On the other, it referred to 
an attitude of complete contempt for markets. 
Actually, this is still the case today: 

In Greece the word "timi" means honor, which has been typi- 
cally seen as the most important value in Greek village society. 
Honor is often characterized in Greece as an open-handed gen- 
erosity and blatant disregard for monetary costs and counting. 
And yet the same word also means "price" as in the price of a 
pound of tomatoes. 29 



The word "crisis" literally refers to a crossroads: it is the point 
where things could go either of two different ways. The odd thing 
about the crisis in the concept of honor is that it never seems to have 
been resolved. Is honor the willingness to pay one's monetary debts? 
Or is it the fact that one does not feel that monetary debts are really 
that important? It appears to be both at the same time. 

There's also the question of what men of honor actually do think is 
important. When most of us think of a Mediterranean villager's sense 
of honor, we don't think so much of a casual attitude toward money 
as of a veritable obsession with premarital virginity. Masculine honor 
is caught up not even so much in a man's ability to protect his wom- 
enfolk as in his ability to protect their sexual reputations, to respond 
to any suggestion of impropriety on the part of his mother, wife, sister, 
or daughter as if it were a direct physical attack on his own person. 
This is a stereotype, but it's not entirely unjustified. One historian 
who went through fifty years of police reports about knife-fights in 
nineteenth-century Ionia discovered that virtually every one of them 
began when one party publicly suggested that the other's wife or sister 
was a whore.' 

So, why the sudden obsession with sexual propriety? It doesn't 
seem to be there in the Welsh or Irish material. There, the greatest 
humiliation was to see your sister or daughter reduced to scrubbing 
someone else's laundry. What is it, then, about the rise of money and 
markets that cause so many men to become so uneasy about sex? 31 

This is a difficult question, but at the very least, one can imagine 
how the transition from a human economy to a commercial one might 
cause certain moral dilemmas. What happens, for instance, when the 
same money once used to arrange marriages and settle affairs of honor 
can also be used to pay for the services of prostitutes? 

As we'll see, there is reason to believe that it is in such moral 
crises that we can find the origin not only of our current conceptions 
of honor, but of patriarchy itself. This is true, at least, if we define 
"patriarchy" in its more specific Biblical sense: the rule of fathers, with 
all the familiar images of stern bearded men in robes, keeping a close 
eye over their sequestered wives and daughters, even as their children 
kept a close eye over their flocks and herds, familiar from the book 
of Genesis.' 2 Readers of the Bible had always assumed that there was 
something primordial in all this; that this was simply the way desert 
people, and thus the earliest inhabitants of the Near East, had always 
behaved. This was why the translation of Sumerian, in the first half of 
the twentieth century, came as something of a shock. 



In the very earliest Sumerian texts, particularly those from roughly 
3000 to 2500 bc, women are everywhere. Early histories not only re- 
cord the names of numerous female rulers, but make clear that women 
were well represented among the ranks of doctors, merchants, scribes, 
and public officials, and generally free to take part in all aspects of 
public life. One cannot speak of full gender equality: men still outnum- 
bered women in all these areas. Still, one gets the sense of a society 
not so different than that which prevails in much of the developed 
world today. Over the course of the next thousand years or so, all this 
changes. The place of women in civic life erodes; gradually, the more 
familiar patriarchal pattern takes shape, with its emphasis on chastity 
and premarital virginity, a weakening and eventually wholesale disap- 
pearance of women's role in government and the liberal professions, 
and the loss of women's independent legal status, which renders them 
wards of their husbands. By the end of the Bronze Age, around 1200 bc, 
we begin to see large numbers of women sequestered away in harems 
and (in some places, at least), subjected to obligatory veiling. 

In fact, this appears to reflect a much broader worldwide pattern. 
It has always been something of a scandal for those who like to see 
the advance of science and technology, the accumulation of learning, 
economic growth — "human progress," as we like to call it — as neces- 
sarily leading to greater human freedom, that for women, the exact 
opposite often seems to be the case. Or at least, has been the case until 
very recent times. A similar gradual restriction on women's freedoms 
can be observed in India and China. The question is, obviously, Why? 
The standard explanation in the Sumerian case has been the gradual 
infiltration of pastoralists from the surrounding deserts who, presum- 
ably, always had more patriarchal mores. There was, after all, only a 
narrow strip of land along the Tigris and Euphrates rivers that could 
support intensive irrigation works, and hence, urban life. Civilization 
was thus from early times surrounded by a fringe of desert people, who 
lived much like those described in Genesis and spoke the same Semitic 
languages. It is undeniably true that, over the course of time, the Su- 
merian language was gradually replaced — first by Akkadian, then by 
Amorite, then by Aramaic languages, and finally, most recently of all, 
by Arabic, which was also brought to Mesopotamia and the Levant by 
desert pastoralists. While all this did, clearly, bring with it profound 
cultural changes as well, it's not a particularly satisfying explanation. 33 
Former nomads appear to have been willing to adapt to urban life in 
any number of other ways. Why not that one? And it's very much a 
local explanation and does nothing, really, to explain the broader pat- 
tern. Feminist scholarship has instead tended to emphasize the growing 



scale and social importance of war, and the increasing centralization 
of the state that accompanied it. 34 This is more convincing. Certainly, 
the more militaristic the state, the harsher its laws tended to be toward 
women. But I would add another, complementary argument. As I have 
emphasized, historically, war, states, and markets all tend to feed off 
one another. Conquest leads to taxes. Taxes tend to be ways to create 
markets, which are convenient for soldiers and administrators. In the 
specific case of Mesopotamia, all of this took on a complicated relation 
to an explosion of debt that threatened to turn all human relations — 
and by extension, women's bodies — into potential commodities. At the 
same time, it created a horrified reaction on the part of the (male) win- 
ners of the economic game, who over time felt forced to go to greater 
and greater lengths to make clear that their women could in no sense 
be bought or sold. 

A glance at the existing material on Mesopotamian marriage gives 
us a clue as to how this might have happened. 

It is common anthropological wisdom that bridewealth tends to 
be typical of situations where population is relatively thin, land not a 
particularly scarce resource, and therefore, politics are all about con- 
trolling labor. Where population is dense and land at a premium, one 
tends to instead find dowry: adding a woman to the household is add- 
ing another mouth to feed, and rather than being paid off, a bride's 
father is expected to contribute something (land, wealth, money . . .) 
to help support his daughter in her new home. 35 In Sumerian times, for 
instance, the main payment at marriage was a huge gift of food paid by 
the groom's father to the bride's, destined to provide a sumptuous feast 
for the wedding. 36 Before long, however, this seems to have split into 
two payments, one for the wedding, another to the woman's father, 
calculated — and often paid — in silver. 37 Wealthy women sometimes ap- 
pear to have ended up with the money: at least, many appear to have 
to worn silver arm and leg rings of identical denominations. 

However as time went on, this payment, called the terhatum, often 
began to take on the qualities of a simple purchase. It was referred 
to as "the price of a virgin" — not a mere metaphor, since the illegal 
deflowering of a virgin was considered a property crime against her 
father. 38 Marriage was referred to as "taking possession" of a woman, 
the same word one would use for the seizure of goods. 39 In principle, 
a wife, once possessed, owed her husbands strict obedience, and often 
could not seek a divorce even in cases of physical abuse. 

For women with wealthy or powerful parents, all this remained 
largely a matter of principle, modified considerably in practice. Mer- 
chants' daughters, for example, typically received substantial cash 



dowries, with which they could go into business in their own right, 
or act as partners to their husbands. However, for the poor — that is, 
most people — marriage came more and more to resemble a simple cash 

Some of this must have been an effect of slavery: while actual 
slaves were rarely numerous, the very existence of a class of people 
with no kin, who were simply commodities, did make a difference. In 
Nuzi, for instance, "the brideprice was paid in domestic animals and 
silver amounting to a total value of 40 shekels of silver'" — to which the 
author drily adds, "there is some evidence that it was equal to the price 
of a slave girl." 40 This must have been making things uncomfortably 
obvious. It's in Nuzi, too, where we happen to have unusually detailed 
records, that we find examples of rich men paying cut-rate "brideprice" 
to impoverished families to acquire a daughter who they would then 
adopt, but who would in fact be either kept as a concubine or nurse- 
maid, or married to one of their slaves. 41 

Still, the really critical factor here was debt. As I pointed out in the 
last chapter, anthropologists have long emphasized that paying bride- 
wealth is not the same as buying a wife. After all — and this was one 
of the clinching arguments, remember, in the original 1930s League of 
Nations debate — if a man were really buying a woman, wouldn't he 
also be able to sell her? Clearly African and Melanesian husbands were 
not able to sell their wives to some third party. At most, they could 
send them home and demand back their bridewealth. 42 

A Mesopotamian husband couldn't sell his wife either. Or, nor- 
mally he couldn't. Still, everything changed the moment he took out a 
loan. Since if he did, it was perfectly legal — as we've seen — to use his 
wife and children as surety, and if he was unable to pay, they could 
then be taken away as debt pawns in exactly the same way that he 
could lose his slaves, sheep, and goats. What this also meant was that 
honor and credit became, effectively, the same thing: at least for a 
poor man, one's creditworthiness was precisely one's command over 
one's household, and (the flip side, as it were) relations of domestic 
authority, relations that in principle meant ones of care and protection, 
became property rights that could indeed be bought and sold. 

Again, for the poor, this meant that family members became com- 
modities that could be rented or sold. Not only could one dispose of 
daughters as "brides" to work in rich men's households, tablets in Nuzi 
show that one could now hire out family members simply by taking 
out a loan: there are recorded cases of men sending their sons or even 
wives as "pawns" for loans that were clearly just advance payment for 
employment in the lender's farm or cloth workshop. 43 



The most dramatic and enduring crisis centered on prostitution. 
It's actually not entirely clear, from the earliest sources, whether one 
can speak here of "prostitution" at all. Sumerian temples do often ap- 
pear to have hosted a variety of sexual activities. Some priestesses, for 
instance, were considered to be married to or otherwise dedicated to 
gods. What this meant in practice seems to have varied considerably. 
Much as in the case of the later devadasis, or "temple dancers" of 
Hindu India, some remained celibate; others were permitted to marry 
but were not to bear children; others were apparently expected to find 
wealthy patrons, becoming in effect courtesans to the elite. Still oth- 
ers lived in the temples and had the responsibility to make themselves 
sexually available to worshippers on certain ritual occasions. 44 One 
thing the early texts do make clear is that all such women were con- 
sidered extraordinarily important. In a very real sense, they were the 
ultimate embodiments of civilization. After all, the entire machinery of 
the Sumerian economy ostensibly existed to support the temples, which 
were considered the households of the gods. As such, they represented 
the ultimate possible refinement in everything from music and dance to 
art, cuisine, and graciousness of living. Temple priestesses and spouses 
of the gods were the highest human incarnations of this perfect life. 

It's also important to emphasize that Sumerian men do not appear, 
at least in this earliest period, to have seen anything troubling about 
the idea of their sisters having sex for money. To the contrary, insofar 
as prostitution did occur (and remember, it could not have been nearly 
so impersonal, cold-cash a relation in a credit economy), Sumerian 
religious texts identify it as among the fundamental features of human 
civilization, a gift given by the gods at the dawn of time. Procreative 
sex was considered natural (after all, animals did it). Non-procreative 
sex, sex for pleasure, was divine. 45 

The most famous expression of this identification of prostitute 
and civilization can be found in the story of Enkidu in the epic of Gil- 
gamesh. In the beginning of the story, Enkidu is a monster — a naked 
and ferocious "wild man" who grazes with the gazelles, drinks at the 
watering place with wild cattle, and terrorizes the people of the city. 
Unable to defeat him, the citizens finally send out a courtesan who is 
also a priestess of the goddess Ishtar. She strips before him, and they 
make love for six days and seven nights. Afterward, Enkidu's former 
animal companions run away from him. After she explains that he has 
now learned wisdom and become like a God (she is, after all, a divine 
consort), he agrees to put on clothing and come to live in the city like 
a proper, civilized human being. 46 



Already, in the earliest version of the Enkidu story, though, one 
can detect a certain ambivalence. Much later, Enkidu is sentenced to 
death by the gods, and his immediate reaction is to condemn the cour- 
tesan for having brought him from the wilds in the first place: he curses 
her to become a common streetwalker or tavern keeper, living among 
vomiting drunks, abused and beaten by her clients. Then, later, he re- 
grets his behavior and blesses her instead. But that trace of ambivalence 
was there from the beginning, and over time, it grew more powerful. 
From early times, Sumerian and Babylonian temple complexes were 
surrounded by far less glamorous providers of sexual services — indeed, 
by the time we know much about them, they were the center of veri- 
table red-light districts full of taverns with dancing girls, men in drag 
(some of them slaves, some runaways), and an almost infinite variety of 
prostitutes. There is an endlessly elaborate terminology whose subtle- 
ties are long since lost to us. Most seem to have doubled as entertain- 
ers: tavern-keepers doubled as musicians; male transvestites were not 
only singers and dancers, but often performed knife-throwing acts. 
Many were slaves put to work by their masters, or women working 
off religious vows or debts, or debt bondswomen, or, for that matter, 
women escaping debt bondage with no place else to go. Over time, 
many of the lower-ranking temple women were either bought as slaves 
or debt peons as well, and there might have often been a blurring of 
roles between priestesses who performed erotic rituals and prostitutes 
owned by the temple (and hence, in principle, by the god), sometimes 
lodged within the temple compound itself, whose earnings added to 
the temple treasuries. 47 Since most everyday transactions in Mesopo- 
tamia were not cash transactions, once has to assume that it was the 
same with prostitutes — like the tavern-keepers, many of whom seem to 
have been former prostitutes, they developed ongoing credit relations 
with their clients — and this must have meant that most were less like 
what we think of as streetwalkers and more like courtesans. 48 Still, 
the origins of commercial prostitution appear to have been caught up 
in a peculiar mixture of sacred (or once-sacred) practice, commerce, 
slavery, and debt. 

"Patriarchy" originated, first and foremost, in a rejection of the great 
urban civilizations in the name of a kind of purity, a reassertion of pa- 
ternal control against great cities like Uruk, Lagash, and Babylon, seen 
as places of bureaucrats, traders, and whores. The pastoral fringes, 
the deserts and steppes away from the river valleys, were the places 



to which displaced, indebted farmers fled. Resistance, in the ancient 
Middle East, was always less a politics of rebellion than a politics of 
exodus, of melting away with one's flocks and families — often before 
both were taken away. 49 There were always tribal peoples living on the 
fringes. During good times, they began to take to the cities; in hard 
times, their numbers swelled with refugees — farmers who effectively 
became Enkidu once again. Then, periodically, they would create their 
own alliances and sweep back into the cities once again as conquerors. 
It's difficult to say precisely how they imagined their situation, because 
it's only in the Old Testament, written on the other side of the Fertile 
Crescent, that one has any record of the pastoral rebels' points of view. 
But nothing there mitigates against the suggestion that the extraordi- 
nary emphasis we find there on the absolute authority of fathers, and 
the jealous protection of their fickle womenfolk, were made possible 
by, but at the same time a protest against, this very commoditization 
of people in the cities that they fled. 

The world's Holy Books — the Old and New Testaments, the Ko- 
ran, religious literature from the Middle Ages to this day — echo this 
voice of rebellion, combining contempt for the corrupt urban life, sus- 
picion of the merchant, and often, intense misogyny. One need only 
think of the image of Babylon itself, which has become permanently 
lodged in the collective imagination as not only the cradle of civiliza- 
tion, but also the Place of Whores. Herodotus echoed popular Greek 
fantasies when he claimed that every Babylonian maiden was obliged 
to prostitute herself at the temple, so as to raise the money for her 
dowry. 50 In the New Testament, Saint Peter often referred to Rome 
as "Babylon," and the Book of Revelation provides perhaps the most 
vivid image of what he meant by this when it speaks of Babylon, "the 
great whore," sitting "upon a scarlet colored beast, full of names of 

17:4 And the woman was arrayed in purple and scarlet color, 
and decked with gold and precious stones and pearls, having a 
golden cup in her hand full of abominations and filthiness of 
her fornication: 

17:5 And upon her forehead was a name written, mystery, 


Such is the voice of patriarchal hatred of the city, and of the angry 
millennial voices of the fathers of the ancient poor. 



Patriarchy as we know it seems to have taken shape in a see-sawing 
battle between the newfound elites and newly dispossessed. Much of 
my own analysis here is inspired by the brilliant work of feminist his- 
torian Gerda Lerner, who, in an essay on the origins of prostitution, 

Another source for commercial prostitution was the pauper- 
ization of farmers and their increasing dependence on loans 
in order to survive periods of famine, which led to debt slav- 
ery. Children of both sexes were given up for debt pledges or 
sold for "adoption." Out of such practices, the prostitution of 
female family members for the benefit of the head of the fam- 
ily could readily develop. Women might end up as prostitutes 
because their parents had to sell them into slavery or because 
their impoverished husbands might so use them. Or they might 
become self-employed as a last alternative to enslavement. 
With luck, they might in this profession be upwardly mobile 
through becoming concubines. 

By the middle of the second millennium B.C., prostitution 
was well established as a likely occupation for the daughters of 
the poor. As the sexual regulation of women of the propertied 
class became more firmly entrenched, the virginity of respect- 
able daughters became a financial asset for the family. Thus, 
commercial prostitution came to be seen as a social necessity 
for meeting the sexual needs of men. What remained problem- 
atic was how to distinguish clearly and permanently between 
respectable and non-respectable women. 

This last point is crucial. The most dramatic known attempt to 
solve the problem, Lerner observes, can be found in a Middle Assyrian 
law code dating from somewhere between 1400 and 1100 BC, which is 
also the first known reference to veiling in the history of the Middle 
East — and also, Lerner emphasizes, first to make the policing of social 
boundaries the responsibility of the state. 52 It is not surprising that this 
takes place under the authority of perhaps the most notoriously milita- 
ristic state in the entire ancient Middle East. 

The code carefully distinguishes among five classes of women. Re- 
spectable women (either married ladies or concubines), widows, and 
daughters of free Assyrian men — "must veil themselves" when they go 
out on the street. Prostitutes and slaves (and prostitutes are now con- 
sidered to include unmarried temple servants as well as simple harlots) 
are not allowed to wear veils. The remarkable thing about the laws is 



that the punishments specified in the code are not directed at respect- 
able women who do not wear veils, but against prostitutes and slaves 
who do. The prostitute was to be publicly beaten fifty times with staves 
and have pitch poured on her head; the slave girl was to have her ears 
cut off. Free men proven to have knowingly abetted an impostor would 
also be thrashed and put to a month's forced labor. 

Presumably in the case of respectable women, the law was assumed 
to be self-enforcing: as what respectable woman would wish to go out 
on the street in the guise of a prostitute? 

When we refer to "respectable" women, then, we are referring to 
those whose bodies could not, under any conditions, be bought or sold. 
Their physical persons were hidden away and permanently relegated 
to some man's domestic sphere; when they appeared in public veiled, 
they were effectively still ostentatiously walking around, even in public, 
inside such a sphere. 53 Women who could be exchanged for money, on 
the other hand, must be instantly recognizable as such. 

The Assyrian law code is one isolated instance; veils certainly did 
not become obligatory everywhere after 1300 bc. But it provides a win- 
dow on developments that were happening, however unevenly, even 
spasmodically, across the region, propelled by the intersection of com- 
merce, class, defiant assertions of male honor, and the constant threat 
of the defection of the poor. States seem to have played a complex dual 
role, simultaneously fostering commoditization and intervening to ame- 
liorate its effects: enforcing the laws of debt and rights of fathers, and 
offering periodic amnesties. But the dynamic also led, over the course 
of millennia, to a systematic demotion of sexuality itself from a divine 
gift and embodiment of civilized refinement to one of its more familiar 
associations: with degradation, corruption, and guilt. 

Here I think we have the explanation for that general decline of wom- 
en's freedoms that may be observed in all the great urban civilizations 
for so much of their history. In all of them, similar things were hap- 
pening, even if in each case, the pieces came together in different ways. 

The history of China, for instance, saw continual and largely un- 
successful government campaigns to eradicate both brideprice and debt 
slavery, and periodic scandals over the existence of "markets in daugh- 
ters," including the outright sale of girls as daughters, wives, concu- 
bines, or prostitutes (at the buyer's discretion) continue to this day. 54 
In India, the caste system allowed what were otherwise differences 
between rich and poor to be made formal and explicit. Brahmins and 



other members of the upper castes jealously sequestered their daugh- 
ters, and married them off with lavish dowries, while the lower castes 
practiced brideprice, allowing members of the higher ("twice-born") 
castes to scoff at them for selling their daughters. The twice-born were 
likewise largely protected from falling into debt bondage, while for 
much of the rural poor, debt dependency was institutionalized, with 
the daughters of poor debtors, predictably, often dispatched to brothels 
or to the kitchens or laundries of the rich. 55 In either case, between the 
push of commoditization, which fell disproportionally on daughters, 
and the pull of those trying to reassert patriarchal rights to "pro- 
tect" women from any suggestion that they might be commoditized, 
women's formal and practical freedoms appear to have been gradually 
but increasingly restricted and effaced. As a result, notions of honor 
changed too, becoming a kind of protest against the implications of the 
market, even as at the same time (like the world religions) they came 
to echo that market logic in endless subtle ways. 

Nowhere, however, are our sources as rich and detailed as they 
are for ancient Greece. This is partly because a commercial economy 
arrived there so late, almost three thousand years later than in Sumer. 
As a result, Classical Greek literature gives us a unique opportunity to 
observe the transformation as it was actually taking place. 

Ancient Greece (Honor and Debt) 

The world of the Homeric epics is one dominated by heroic warriors 
who are disdainful of trade. In many ways, it is strikingly reminiscent 
of medieval Ireland. Money existed, but it was not used to buy any- 
thing; important men lived their lives in pursuit of honor, which took 
material form in followers and treasure. Treasures were given as gifts, 
awarded as prizes, carried off as loot. 56 This is no doubt how time first 
came to mean both "honor" and "price" — in such a world, no one 
sensed any sort of contradiction between the two. 57 

All this was to change dramatically when commercial markets be- 
gan to develop two hundred years later. Greek coinage seem to have 
been first used mainly to pay soldiers, as well as to pay fines and fees 
and payments made to and by the government, but by about 600 BC, 
just about every Greek city-state was producing its own coins as a 
mark of civic independence. It did not take long, though, before coins 
were in common use in everyday transactions. By the fifth century, in 



Greek cities, the agora, the place of public debate and communal as- 
sembly, also doubled as a marketplace. 

One of the first effects of the arrival of a commercial economy was 
a series of debt crises, of the sort long familiar from Mesopotamia and 
Israel. "The poor," as Aristotle succinctly put it in his Constitution of 
the Athenians, "together with their wives and children, were enslaved 
to the rich." 58 Revolutionary factions emerged, demanding amnesties, 
and most Greek cities were at least for a while taken over by populist 
strongmen swept into power partly by the demand for radical debt 
relief. The solution most cities ultimately found, however, was quite 
different than it had been in the Near East. Rather than institutionalize 
periodic amnesties, Greek cities tended to adopt legislation limiting or 
abolishing debt peonage altogether, and then, to forestall future crises, 
they would turn to a policy of expansion, shipping off the children of 
the poor to found military colonies overseas. Before long, the entire 
coast from Crimea to Marseille was dotted with Greek cities, which 
served, in turn, as conduits for a lively trade in slaves. 59 The sudden 
abundance of chattel slaves, in turn, completely transformed the nature 
of Greek society. First and most famously, it allowed even citizens of 
modest means to take part in the political and cultural life of the city 
and have a genuine sense of citizenship. But this, in turn, drove the 
old aristocratic classes to develop more and more elaborate means of 
setting themselves off from what they considered the tawdriness and 
moral corruption of the new democratic state. 

When the curtain truly goes up on Greece, in the fifth century, we 
find everybody arguing about money. For the aristocrats, who wrote 
most of the surviving texts, money was the embodiment of corruption. 
Aristocrats disdained the market. Ideally, a man of honor should be 
able to raise everything he needed on his own estates, and never have 
to handle cash at all. 60 In practice, they knew this was impossible. 
Yet at every point they tried to set themselves apart from the values 
of the ordinary denizens of the marketplace: to contrast the beautiful 
gold and silver beakers and tripods they gave one another at funerals 
and weddings with the vulgar hawking of sausages or charcoal; the 
dignity of the athletic contests for which they endlessly trained with 
commoners' vulgar gambling; the sophisticated and literate courtesans 
who attended to them at their drinking clubs, and common prostitutes 
(pome) — slave-girls housed in brothels near the agora, brothels often 
sponsored by the democratic polis itself as a service to the sexual needs 
of its male citizenry. In each case, they placed a world of gifts, generos- 
ity, and honor above sordid commercial exchange. 61 



This resulted in a slightly different play of push and pull than we 
saw in Mesopotamia. On the one hand, we see a culture of aristocratic 
protest against what they saw as the lowly commercial sensibilities of 
ordinary citizens. On the other hand, we see an almost schizophrenic 
reaction on the part of the ordinary citizens themselves, who simulta- 
neously tried to limit or even ban aspects of aristocratic culture and to 
imitate aristocratic sensibilities. Pederasty is an excellent case in point 
here. On the one hand, man-boy love was seen as the quintessential 
aristocratic practice — it was the way, in fact, that young aristocrats 
would ordinarily become initiated into the privileges of high society. As 
a result, the democratic polis saw it as politically subversive and made 
sexual relations between male citizens illegal. At the same time, almost 
everyone began to practice it. 

The famous Greek obsession with male honor that still informs so 
much of the texture of daily life in rural communities in Greece hear- 
kens back not so much to Homeric honor but to this aristocratic rebel- 
lion against the values of the marketplace, which everyone, eventually, 
began to make their own. 62 The effects on women, though, were even 
more severe than they had been in the Middle East. Already by the 
age of Socrates, while a man's honor was increasingly tied to disdain 
for commerce and assertiveness in public life, a woman's honor had 
come to be defined in almost exclusively sexual terms: as a matter of 
virginity, modesty, and chastity, to the extent that respectable women 
were expected to be shut up inside the household and any woman who 
played a part in public life was considered for that reason a prostitute, 
or tantamount to one. 63 The Assyrian habit of veiling was not widely 
adopted in the Middle East, but it was adopted in Greece. As much 
as it flies in the face of our stereotypes about the origins of "Western" 
freedoms, women in democratic Athens, unlike those of Persia or Syria, 
were expected to wear veils when they ventured out in public. 64 

Money, then, had passed from a measure of honor to a measure of 
everything that honor was not. To suggest that a man's honor could 
be bought with money became a terrible insult — this despite the fact 
that, since men were often taken in war or even by bandits or pirates 
and held for ransom, they often did go through dramas of bondage 
and redemption not unlike those experienced by so many Middle East- 
ern women. One particularly striking way of hammering it home — 
actually, in this case, almost literally — was by branding ransomed pris- 
oners with the mark of their own currency, much as if today some 



imaginary foreign kidnapper, after having received the ransom money 
for an American victim, made a point of burning a dollar sign onto the 
victim's forehead before returning him. 65 

One question that isn't clear from all this is, Why? Why had mon- 
ey, in particular, become such a symbol of degradation? Was it all 
because of slavery? One might be tempted to conclude that it was: per- 
haps the newfound presence of thousands of utterly degraded human 
beings in ancient Greek cities made any suggestion that a free man (let 
alone a free woman) might in any sense be bought or sold particularly 
insulting. But this is clearly not the case. Our discussion of the slave 
money of Ireland showed that the possibility of the utter degradation 
of a human being was in no sense a threat to heroic honor — in a way, 
it was its very essence. Homeric Greeks do not appear to have been 
any different. It seems hardly coincidental that the quarrel between 
Agamemnon and Achilles that sets off the action of the Iliad, generally 
considered to be the first great work of Western literature, is a dispute 
over honor between two heroic warriors over the disposition of a slave 
girl. 66 Agamemnon and Achilles were also well aware that it would 
only take an unfortunate turn in battle, or perhaps a shipwreck, for 
either of them to wind up as a slave. Odysseus barely escapes being 
enslaved on several occasions in the Odyssey. Even in the third century 
ad, the Roman emperor Valerian (253-260 ad), defeated at the Battle of 
Edessa, was captured and spent the last years of his life as the footstool 
that the Sassanian emperor Shapur I used to mount his horse. Such 
were the perils of war. All this was essential to the nature of martial 
honor. A warrior's honor is his willingness to play a game on which 
he stakes everything. His grandeur is directly proportional to how far 
he can fall. 

Was it, then, that the advent of commercial money threw tradition- 
al social hierarchies into disarray? Greek aristocrats often spoke this 
way, but the complaints seem rather disingenuous. Surely it was money 
that allowed such a polished aristocracy to exist in the first place. 67 
Rather, the thing that really seemed to bother them about money was 
simply that they wanted it so much. Since money could be used to buy 
just about anything, everybody wanted it. That is: it was desirable 
because it was non-discriminating. One could see how the metaphor 
of the pome might seem particularly appropriate. A woman "common 
to the people" — as the poet Archilochos put it — is available to every- 
one. In principle, we shouldn't be attracted to such an undiscriminat- 
ing creature. In fact, of course, we are. 68 And nothing was both so 
undiscriminating, and so desirable, as money. True, Greek aristocrats 
would ordinarily insist that they were not attracted to common pome, 



and that the courtesans, flute-girls, acrobats, and beautiful boys that 
frequented their symposia were not really prostitutes at all (though at 
times they also admitted that they really were), they also struggled with 
the fact that their own high-minded pursuits, such as chariot-racing, 
outfitting ships for the navy, and sponsoring tragic dramas, required 
the exact same coins as the ones used to buy cheap perfume and pies 
for a fisherman's wife — the only real difference being that their pursuits 
tended to require a lot more of them. 6 ' 

We might say, then, that money introduced a democratization of 
desire. Insofar as everyone wanted money, everyone, high and low, was 
pursuing the same promiscuous substance. But even more: increasingly, 
they did not just want money. They needed it. This was a profound 
change. In the Homeric world, as in most human economies, we hear 
almost no discussion of those things considered necessary to human life 
(food, shelter, clothing) because it is simply assumed that everybody 
has them. A man with no possessions could, at the very least, become a 
retainer in some rich man's household. Even slaves had enough to eat. 70 
Here too, the prostitute was a potent symbol for what had changed, 
since while some of the denizens of brothels were slaves, others were 
simply poor; the fact that their basic needs could no longer be taken 
for granted were precisely what made them submit to others' desires. 
This extreme fear of dependency on others' whims lies at the basis of 
the Greek obsession with the self-sufficient household. 

All this lies behind the unusually assiduous efforts of the male 
citizens of Greek city-states — like the later Romans — to insulate their 
wives and daughters from both the dangers and the freedoms of the 
marketplace. Unlike their equivalents in the Middle East, they do not 
seem to have offered them as debt pawns. Neither, at least in Ath- 
ens, was it legal for the daughters of free citizens to be employed as 
prostitutes. 71 As a result, respectable women became invisible, largely 
removed from the high dramas of economic and political life. 72 If any- 
one was enslaved for debt, it was normally the debtor. Even more 
dramatically, it was ordinarily male citizens who accused one another 
of prostitution — with Athenian politicians regularly asserting that their 
rivals, when they were young boys being plied with gifts from their 
male suitors, were really trading sex for money, and hence deserved to 
lose their civic freedoms. 73 

It might be helpful here, to return to the principles laid out in chap- 
ter five. What we see above all is the erosion both of older forms of 



hierarchy — the Homeric world of great men with their retainers — and, 
at the same time, of older forms of mutual aid, with communistic rela- 
tions increasingly being confined to the interior of the household. 

It's the former — the erosion of hierarchy — that really seems to 
have been at stake in the "debt crises" that struck so many Greek cities 
around 600 bc, right around the time that commercial markets were 
first taking shape. 74 When Aristotle spoke of the Athenian poor as fall- 
ing slave to the rich, what he appears to have meant was that in harsh 
years, many poor farmers fell into debt; as a result they ended up as 
sharecroppers on their own property, dependents. Some were even sold 
abroad as slaves. This led to unrest and agitation, and also to demands 
for clean slates, for the freeing of those held in bondage, and for the 
redistribution of agricultural land. In a few cases it led to outright 
revolution. In Megara, we are told, a radical faction that seized power 
not only made interest-bearing loans illegal, but did so retroactively, 
forcing creditors to make restitution of all interest they had collected 
in the past. 75 In other cities, populist tyrants seized power on promises 
to abrogate agricultural debts. 

On the face of it, all this doesn't seem all that surprising: the mo- 
ment when commercial markets developed, Greek cities quickly devel- 
oped all the social problems that had been plaguing Middle Eastern 
cities for millennia: debt crises, debt resistance, political unrest. In real- 
ity, things are not so clear. For one thing, for the poor to be "enslaved 
to the rich," in the loose sense that Aristotle seems to be using, was 
hardly a new development. Even in Homeric society, it was assumed 
as a matter of course that rich men would live surrounded by depen- 
dents and retainers, drawn from the ranks of the dependent poor. The 
critical thing, though, about such relations of patronage is that they 
involved responsibilities on both sides. A noble warrior and his humble 
client were assumed to be fundamentally different sorts of people, but 
both were also expected to take account of each other's (fundamentally 
different) needs. Transforming patronage into debt relations — treating, 
say, an advance of seed corn as a loan, let alone an interest-bearing 
loan — changed all this. 76 What's more, it did so in two completely 
contradictory respects. On the one hand, a loan implies no ongoing 
responsibilities on the part of the creditor. On the other, as I have con- 
tinually emphasized, a loan does assume a certain formal, legal equality 
between contractor and contractee. It assumes that they are, at least 
in some ways on some level, fundamentally the same kind of person. 
This is certainly about the most ruthless and violent form of equality 
imaginable. But the fact it was conceived as equality before the market 
made such arrangements even more difficult to endure. 77 



The same tensions can be observed between neighbors, who in 
farming communities tend to give, lend, and borrow things amongst 
themselves — anything from sieves and sickles, to charcoal and cooking 
oil, to seed corn or oxen for plowing. On the one hand, such giving 
and lending were considered essential parts of the basic fabric of hu- 
man sociability in farm communities, on the other, overly demanding 
neighbors were a notorious irritant — one that could only have grown 
worse when all parties are aware of precisely how much it would have 
cost to buy or rent the same items that were being given away. Again, 
one of the best ways to get a sense of what were considered everyday 
dilemmas for Mediterranean peasants is to look at jokes. Late stories 
from across the Aegean in Turkey echo exactly the same concerns: 

Nasruddin's neighbor once came by ask if he could borrow his 
donkey for an unexpected errand. Nasruddin obliged, but the 
next day the neighbor was back again — he needed to take some 
grain to be milled. Before long he was showing up almost every 
morning, barely feeling he needed a pretext. Finally, Nasruddin 
got fed up, and one morning told him his brother had already 
come by and taken the donkey. 

Just as the neighbor was leaving he heard a loud braying 
sound from the yard. 

"Hey, I thought you said the donkey wasn't here!" 

"Look, who are you going to believe?" asked Nasruddin. 
"Me, or some animal?" 

With the appearance of money, it could also become unclear what 
was a gift, and what a loan. On the one hand, even with gifts, it was 
always considered best to return something slightly better than one had 
received. 78 On the other hand, friends do not charge one another inter- 
est, and any suggestion that they might was sure to rankle. So what's 
the difference between a generous return gift and an interest payment? 
This is the basis of one of the most famous Nasruddin stories, one that 
appears to have provided centuries of amusement for peasants across 
the Mediterranean basin and adjoining regions. (It is also, I might 
note, a play on the fact that in many Mediterranean languages, Greek 
included, the word for "interest" literally means "offspring.") 

One day Nasruddin's neighbor, a notorious miser, came by 
to announce he was throwing a party for some friends. Could 
he borrow some of Nasruddin's pots? Nasruddin didn't have 
many but said he was happy to lend whatever he had. The next 



day the miser returned, carrying Nasruddin's three pots, and 
one tiny additional one. 

"What's that?" asked Nasrudddin. 

"Oh, that's the offspring of the pots. They reproduced dur- 
ing the time they were with me." 

Nasruddin shrugged and accepted them, and the miser left 
happy that he had established a principle of interest. A month 
later Nasruddin was throwing a party, and he went over to 
borrow a dozen pieces of his neighbor's much more luxurious 
crockery. The miser complied. Then he waited a day. And then 
another . . . 

On the third day, the miser came by and asked what had 
happened to his pots. 

"Oh, them?" Nasruddin said sadly. "It was a terrible trag- 
edy. They died." 7 ' 

In a heroic system, it is only debts of honor — the need to repay 
gifts, to exact revenge, to rescue or redeem friends or kinsmen fallen 
prisoner — that operate completely under a logic of tit-for-tat exchange. 
Honor is the same as credit; it's one's ability to keep one's promises, 
but also, in the case of a wrong, to "get even." As the last phrase 
implies, it was a monetary logic, but money, or anyway money-like 
relations, are confined to this. Gradually, subtly, without anyone com- 
pletely understanding the full implications of what was happening, 
what had been the essence of moral relations turned into the means for 
every sort of dishonest stratagem. 

We know a little about it from trial speeches, many of which have 
survived. Here is one from the fourth century, probably around 365 
bc. Apollodorus was a prosperous but low-born Athenian citizen (his 
father, a banker, had begun life as a slave) who, like many such gentle- 
men, had acquired a country estate. There he made a point of making 
friends with his closest neighbor, Nicostratus, a man of aristocratic 
origins, though currently of somewhat straitened means. They acted as 
neighbors normally did, giving and borrowing small sums, lending each 
other animals or slaves, minding each other's property when one was 
away. Then one day Nicostratus ran into a piece of terrible luck. While 
trying to track down some runaway slaves, he was himself captured by 
pirates and held for ransom at the slave market on the island of Aegi- 
na. His relatives could only assemble part of the price, so he was forced 
:o borrow the rest from strangers in the market. These appear to have 
reen professionals who specialized in such loans, and their terms were 
notoriously harsh: if not repaid in thirty days, the sum doubled; if not 



repaid at all, the debtor became the slave of the man who had put up 
the money for his redemption. 

Tearfully, Nicostratus appealed to his neighbor. All his posses- 
sions were already pledged now to one creditor or another; he knew 
Apollodorus wouldn't have that much cash lying around, but could 
his dear friend possibly put up something of his own by way of secu- 
rity? Apollodorus was moved. He would be happy to forgive all debts 
Nicostratus already owed him, but the rest would be difficult. Still, he 
would do his best. In the end, he arranged to himself take a loan from 
an acquaintance of his, Arcesas, on the security of his town-house, 
at 16 percent annual interest, so as to be able to satisfy Nicostratus's 
creditors while Nicostratus himself arranged a friendly, no-interest era- 
nos loan from his own relatives. But before long, Apollodorus began 
to realize that he had been set up. The impoverished aristocrat had 
decided to take advantage of his nouveau-riche neighbor; he was actu- 
ally working with Arcesas and some of Apollodorus's enemies to have 
him falsely declared a "public debtor," that is, someone who had de- 
faulted on an obligation to the public treasury. This would have first 
of all meant that he would lose his right to take anyone to court (i.e., 
his deceivers, to recover the money), and second, would give them a 
pretext to raid his house to remove his furniture and other possessions. 
Presumably, Nicostratus had never felt especially comfortable being in 
debt to a man he considered his social inferior. Rather like Egil the 
Viking, who would rather kill his friend Einar than have to compose an 
elegy thanking him for an overly magnificent gift, Nicostratus appears 
to have concluded that it was more honorable, or anyway more bear- 
able, to try to extract the money from his lowly friend through force 
and fraud than to spend the rest of his life feeling beholden. Before 
long, things had indeed descended to outright physical violence, and 
the whole matter ended up in court. 80 

The story has everything. We see mutual aid: the communism of 
the prosperous, the expectation that if the need is great enough, or the 
cost manageable enough, friends and neighbors will help one another. 81 
And most did, in fact, have circles of people who would pool money if 
a crisis did arise: whether a wedding, a famine, or a ransom. We also 
see the omnipresent danger of predatory violence that reduces human 
beings to commodities, and by doing so introduces the most cutthroat 
kinds of calculation into economic life — not just on the part of the 
pirates, but even more so, perhaps, on those moneylenders lurking 
by the market offering stiff credit terms to anyone who came to ran- 
som their relatives but found themselves caught short, and who then 
could appeal to the state to allow them to hire men with weapons to 



enforce the contract. We see heroic pride, which sees too great an act 
of generosity as itself a kind of belittling assault. We see the ambigu- 
ity among gifts, loans, and commercial credit arrangements. Neither 
does the way things played out in this case seem particularly unusual, 
except perhaps for Nicostratus's extraordinarily ingratitude. Prominent 
Athenians were always borrowing money to pursue their political proj- 
ects; less-prominent ones were constantly worrying about their debts, 
or how to collect from their own debtors. 82 Finally, there is another, 
subtler element here. While everyday market transactions, at shops 
or stalls in the agora, were here as elsewhere typically conducted on 
credit, the mass production of coinage permitted a degree of anonymity 
for transactions that, in a pure credit regime, simply could not exist. 83 
Pirates and kidnappers do business in cash — yet the loan sharks at Ae- 
gina's marketplace could not have operated without them. It is on this 
same combination of illegal cash business, usually involving violence, 
and extremely harsh credit terms, also enforced through violence, that 
innumerable criminal underworlds have been constructed ever since. 

In Athens, the result was extreme moral confusion. The language 
of money, debt, and finance provided powerful — and ultimately 
irresistible — ways to think about moral problems. Much as in Vedic 
India, people started talking about life as a debt to the gods, of ob- 
ligations as debts, about literal debts of honor, of debt as sin and of 
vengeance as debt collection. 84 Yet if debt was morality — and certainly 
at the very least it was in the interest of creditors, who often had little 
legal recourse to compel debtors to pay up, to insist that it was — what 
was one to make of the fact that money, that very thing that seemed 
capable of turning morality into an exact and quantifiable science, also 
seemed to encourage the very worst sorts of behavior? 

It is from such dilemmas that modern ethics and moral philoso- 
phy begin. I think this is true quite literally. Consider Plato's Repub- 
lic, another product of fourth-century Athens. The book begins when 
Socrates visits an old friend, a wealthy arms manufacturer, at the port 
of Piraeus. They get into a discussion of justice, which begins when the 
old man proposes that money cannot be a bad thing, since it allows 
those who have it to be just, and that justice consists in two things: 
telling the truth, and always paying one's debts. 85 The proposal is easily 
demolished. What, Socrates asks, if someone lent you his sword, went 
violently insane, and then asked for it back (presumably, so he could 
kill someone)? Clearly it can never be right to arm a lunatic whatever 



the circumstances." 6 The old man cheerfully shrugs the problem off 
and heads off to attend to some ritual, leaving his son to carry on 
the argument. 

The son, Polemarchus, switches gears: clearly his father hadn't 
meant "debt" in the literal sense of returning what one has borrowed. 
He meant it more in the sense of giving people what is owed to them; 
repaying good with good and evil with evil; helping one's friends and 
hurting one's enemies. Demolishing this one takes a little more work 
(are we saying justice plays no part in determining who one's friends 
and enemies are? If so, wouldn't someone who decided he had no 
friends, and therefore tried to hurt everyone, be a just man? And even 
if you did have some way to say for certain that one's enemy really is 
an intrinsically bad person and deserves harm, by harming him, do you 
not thus make him worse? Can turning bad people into even worse 
people really be an example of justice?) but it is eventually accom- 
plished. At this point a Sophist, Thrasymachos, enters and denounces 
all of the debaters as milky-eyed idealists. In reality, he says, all talk 
of "justice" is mere political pretext, designed to justify the interests of 
the powerful. And so it should be, because insofar as justice exists, it 
is simply that: the interest of the powerful. Rulers are like shepherds. 
We like to think of them as benevolently tending their flocks, but what 
do shepherds ultimately do with sheep? They kill and eat them, or sell 
the meat for money. Socrates responds by pointing out that Thrasy- 
machos is confusing the art of tending sheep with the art of profiting 
from them. The art of medicine aims to improve health, whether or not 
doctors get paid for practicing it. The art of shepherding aims to ensure 
the well-being of sheep, whether or not the shepherd (or his employer) 
is also a businessman who knows how to extract a profit from them. 
Just so with the art of governance. If such an art exists, it must have 
its own intrinsic aim apart from any profit one might also get from it, 
and what can this be other than the establishment of social justice? It's 
only the existence of money, Socrates suggests, that allows us to imag- 
ine that words like "power" and "interest" refer to universal realities 
that can be pursued in their own right, let alone that all pursuits are 
really ultimately the pursuit of power, advantage, or self-interest. 87 The 
question, he said, is how to ensure that those who hold political office 
will do so not for gain, but rather for honor. 

I will leave off here. As we all know, Socrates eventually gets 
around to offering some political proposals of his own, involving phi- 
losopher kings; the abolition of marriage, the family, and private prop- 
erty; selective human breeding boards. (Clearly, the book was meant 
to annoy its readers, and for more than two thousand years, it has 



succeeded brilliantly.) What I want to emphasize, though, is the degree 
to which what we consider our core tradition of moral and political 
theory today springs from this question: What does it mean to pay 
our debts? Plato presents us first with the simple, literal businessman's 
view. When this proves inadequate, he allows it to be reframed in he- 
roic terms. Perhaps all debts are really debts of honor after all. 88 But 
heroic honor no longer works in a world where (as Apollodorus sadly 
discovered) commerce, class, and profit have so confused everything 
that peoples' true motives are never clear. How do we even know who 
our enemies are? Finally, Plato presents us with cynical realpolitik. 
Maybe nobody really owes anything to anybody. Maybe those who 
pursue profit for its own sake have it right after all. But even that does 
not hold up. We are left with a certainty that existing standards are 
incoherent and self-contradictory, and that some sort of radical break 
would be required in order to create a world that makes any logical 
sense. But most of those who seriously consider a radical break along 
the lines that Plato suggested have come to the conclusion that there 
might be far worse things than moral incoherence. And there we have 
stood, ever since, in the midst of an insoluble dilemma. 

It's not surprising that these issues weighed on Plato's mind. Not seven 
years before, he had taken an ill-fated sea cruise and wound up being 
captured and, supposedly like Nicostratus, offered for sale on the auc- 
tion block at Aegina. However, Plato had better luck. A Libyan phi- 
losopher of the Epicurean school, one Annikeris, happened to be in the 
market at the time. He recognized Plato and ransomed him. Plato felt 
honor-bound to try to repay him, and his Athenian friends assembled 
twenty minas in silver with which to do so, but Annikeris refused to 
accept the money, insisting that it was his honor to be able to benefit a 
fellow lover of wisdom. 89 As indeed it was: Annikeris has been remem- 
bered, and celebrated, for his generosity ever since. Plato went on to 
use the twenty minas to buy land for a school, the famous Academy. 
And while he hardly showed the same ingratitude as Nicostratus, one 
does rather get the impression that even Plato wasn't especially happy 
about the fact that his subsequent career was, in a sense, made pos- 
sible by his debt to a man who he probably considered an extremely 
minor philosopher — and Annikeris wasn't even Greek! At least this 
would help explain why Plato, otherwise the inveterate name-dropper, 
never mentioned Annikeris. We know of his existence only from later 
biographers. 90 



Ancient Rome (Property and Freedom) 

If Plato's work testifies to how profoundly the moral confusion intro- 
duced by debt has shaped our traditions of thought, Roman law reveals 
how much it has shaped even our most familiar institutions. 

German legal theorist Rudolf von Jhering famously remarked 
that ancient Rome had conquered the world three times: the first time 
through its armies, the second through its religion, the third through its 
laws." He might have added: each time more thoroughly. The Empire, 
after all, only spanned a tiny portion of the globe; the Roman Catholic 
Church has spread farther; Roman law has come to provide the lan- 
guage and conceptual underpinnings of legal and constitutional orders 
everywhere. Law students from South Africa to Peru are expected to 
spend a good deal of their time memorizing technical terms in Latin, 
and it is Roman law that provides almost all our basic conceptions 
about contract, obligation, torts, property, and jurisdiction — and, in 
a broader sense, of citizenship, rights, and liberties on which political 
life, too, is based. 

This was possible, Jhering held, because, the Romans were the first 
to turn jurisprudence into a genuine science. Perhaps — but for all that, 
it remains true that Roman law has a few notoriously quirky features, 
some so odd that they have confused and confounded jurists ever since 
Roman law was revived in Italian universities in the High Middle Ages. 
The most notorious of these is the unique way it defines property. In 
Roman law, property, or dominium, is a relation between a person 
and a thing, characterized by absolute power of that person over that 
thing. This definition has caused endless conceptual problems. First of 
all, it's not clear what it would mean for a human to have a "relation" 
with an inanimate object. Human beings can have relations with one 
another. But what would it mean to have a "relation" with a thing? 
And if one did, what would it mean to give that relation legal standing? 
A simple illustration will suffice: imagine a man trapped on a desert 
island. He might develop extremely personal relationships with, say, 
the palm trees growing on that island. If he's there too long, he might 
well end up giving them all names and spending half his time having 
imaginary conversations with them. Still, does he own them? The ques- 
tion is meaningless. There's no need to worry about property rights if 
noone else is there. 

Clearly, then, property is not really a relation between a person 
and a thing. It's an understanding or arrangement between people con- 
cerning things. The only reason that we sometimes fail to notice this is 



that in many cases — particularly when we are talking about our rights 
over our shoes, or cars, or power tools — we are talking of rights held, 
as English law puts it, "against all the world" — that is, understandings 
between ourselves and everyone else on the planet, that they will all 
refrain from interfering with our possessions, and therefore allow us 
to treat them more or less any way we like. A relation between one 
person and everyone else on the planet is, understandably, difficult to 
conceive as such. It's easier to think of it as a relationship with a thing. 
But even here, in practice this freedom to do as one likes turns out to 
be fairly limited. To say that the fact that I own a chainsaw gives me 
an "absolute power" to do anything I want with it is obviously absurd. 
Almost anything I might think of doing with a chainsaw outside my 
own home or land is likely to be illegal, and there are only a limited 
number of things I can really do with it inside. The only thing "abso- 
lute" about my rights to a chainsaw is my right to prevent anyone else 
from using it. 92 

Nonetheless, Roman law does insist that the basic form of property 
is private property, and that private property is the owner's absolute 
power to do anything he wants with his possessions. Twelfth-century 
Medieval jurists came to refine this into three principles, usus (use of 
the thing), fructus (fruits, i.e., enjoyment of the products of the thing), 
and abusus (abuse or destruction of the thing), but Roman jurists 
weren't even interested in specifying that much, since in a certain way, 
they saw the details as lying entirely outside the domain of law. In fact, 
scholars have spent a great deal of time debating whether Roman au- 
thors actually considered private property to be a right (/ws), 93 for the 
very reason that rights were ultimately based on agreements between 
people, and one's power to dispose of one's property was not: it was 
just one's natural ability to do whatever one pleased when social im- 
pediments were absent. 94 

If you think about it, this really is an odd place to start in devel- 
oping a theory of property law. It is probably fair to say that, in any 
part of the world, in any period of history, whether in ancient Japan 
or Machu Picchu, someone who had a piece of string was free to twist 
it, knot it, pull it apart, or toss it in the fire more or less as they had 
a mind to. Nowhere else did legal theorists appear to have found this 
fact in any way interesting or important. Certainly no other tradition 
makes it the very basis of property law — since, after all, doing so made 
almost all actual law little more than a series of exceptions. 

How did this come about? And why? The most convincing expla- 
nation I've seen is Orlando Patterson's: the notion of absolute private 
property is really derived from slavery. One can imagine property not 



as a relation between people, but as a relation between a person and 
a thing, if one's starting point is a relation between two people, one 
of whom is also a thing. (This is how slaves were defined in Roman 
law: they were people who were also a res, a thing.) 95 The emphasis on 
absolute power begins to make sense as well. 96 

The word dominium, meaning absolute private property, was not 
particularly ancient. 97 It only appears in Latin in the late Republic, 
right around the time when hundreds of thousands of captive laborers 
were pouring into Italy, and when Rome, as a consequence, was be- 
coming a genuine slave society. 98 By 50 bc, Roman writers had come to 
simply assume that workers — whether the farmworkers harvesting peas 
in countryside plantations, the muleteers delivering those peas to shops 
in the city, or the clerks keeping count of them — were someone else's 
property. The existence of millions of creatures who were simultane- 
ously persons and things created endless legal problems, and much of 
the creative genius of Roman law was spent in working out the endless 
ramifications. One need only flip open a casebook of Roman law to get 
a sense of these. This is from the second-century jurist Ulpian: 

Again, Mela writes that if some persons were playing ball and 
one of them, hitting the ball quite hard, knocked it against a 
barber's hands, and in this way the throat of a slave, whom the 
barber was shaving, was cut by a razor pressed against it, then 
who is the person with whom the culpability lay is liable under 
the Lex Aquilia [the law of civil damages]? Proclus says that 
the culpability lies with the barber; and indeed, if he was shav- 
ing at a place where games are normally played or where traffic 
was heavy, there is reason to fault him. But it would not be 
badly held that if someone entrusts himself to a barber who has 
a chair in a dangerous place, he should have himself to blame. 99 

In other words, the master cannot claim civil damages against the 
ballplayers or barber for destroying his property if the real problem 
was that he bought a stupid slave. Many of these debates might strike 
us as profoundly exotic (could you be accused of theft for merely con- 
vincing a slave to run away? If someone killed a slave who was also 
your son, could you take your sentimental feelings toward him into 
account in assessing damages, or would you have to stick to his market 
value?) — but our contemporary tradition of jurisprudence is founded 
directly on such debates. 100 

As for dominium, the word is derived from dominus, meaning "mas- 
ter" or "slave-owner," but ultimately from domus, meaning "house" 



or "household." It's of course related to the English term "domestic," 
which even now can be used either to mean "pertaining to private life," 
or to refer to a servant who cleans the house. Domus overlaps some- 
what in meaning with familia, "family" — but, as proponents of "family 
values" might be interested to know, familia itself ultimately derives 
from the word famulus, meaning "slave." A family was originally all 
those people under the domestic authority of a paterfamilias, and that 
authority was, in early Roman law at least, conceived as absolute. 101 A 
man did not have total power over his wife, since she was still to some 
degree under the protection of her own father, but his children, slaves, 
and other dependents were his to do with as he wanted — at least in 
early Roman law, he was perfectly free to whip, torture, or sell them. 
A father could even execute his children, provided he found them to 
have committed capital crimes. 102 With his slaves, he didn't even need 
that excuse. 

In creating a notion of dominium, then, and thus creating the 
modern principle of absolute private property, what Roman jurists 
were doing first of all was taking a principle of domestic authority, of 
absolute power over people, defining some of those people (slaves) as 
things, and then extending the logic that originally applied to slaves to 
geese, chariots, barns, jewelry boxes, and so forth — that is, to every 
other sort of thing that the law had anything to do with. 

It was quite extraordinary, even in the ancient world, for a father 
to have the right to execute his slaves — let alone his children. No one 
is quite sure why the early Romans were so extreme in this regard. 
It's telling, though, that the earliest Roman debt law was equally un- 
usual in its harshness, since it allowed creditors to execute insolvent 
debtors. 103 The early history of Rome, like the histories of early Greek 
city-states, was one of continual political struggle between creditors 
and debtors, until the Roman elite eventually figured out the principle 
that most successful Mediterranean elites learned: that a free peasantry 
means a more effective army, and that conquering armies can provide 
war captives who can do anything debt bondsmen used to do, and 
therefore, a social compromise — allowing limited popular representa- 
tion, banning debt slavery, channeling some of the fruits of empire into 
social-welfare payments — was actually in their interest. Presumably, 
the absolute power of fathers developed as part of this whole constel- 
lation in the same way as we've seen elsewhere. Debt bondage reduced 
family relations to relations of property; social reforms retained the 
new power of fathers but protected them from debt. At the same time, 
the increasing influx of slaves soon meant that any even moderately 
prosperous household was likely to contain slaves. This meant that 



the logic of conquest extended into the most intimate aspects of ev- 
eryday life. Conquered people poured one's bath and combed one's 
hair. Conquered tutors taught one's children about poetry. Since slaves 
were sexually available to owners and their families, as well as to their 
friends and dinner guests, it is likely that most Romans' first sexual 
experience was with a boy or girl whose legal status was conceived as 
that of a defeated enemy. 104 

Over time, this became more and more of a legal fiction — actual 
slaves were much more likely to have been paupers sold by parents, 
unfortunates kidnapped by pirates or bandits, victims of wars or judi- 
cial process among barbarians at the fringes of the empire, or children 
of other slaves. 105 Still, the fiction was maintained. 

What made Roman slavery so unusual, in historical terms, was a 
conjuncture of two factors. One was its very arbitrariness. In dramatic 
contrast with, say plantation slavery in the Americas, there was no 
sense that certain people were naturally inferior and therefore destined 
to be slaves. Instead, slavery was seen as a misfortune that could hap- 
pen to anyone. 106 As a result, there was no reason that a slave might 
not be in every way superior to his or her master: smarter, with a finer 
sense of morality, better taste, and a greater understanding of philoso- 
phy. The master might even be willing to acknowledge this. There was 
no reason not to, since it had no effect on the nature of the relation- 
ship, which was simply one of power. 

The second was the absolute nature of this power. There are many 
places where slaves are conceived as war captives, and masters as con- 
querors with absolute powers of life and death — but usually, this is 
something of an abstract principle. Almost everywhere, governments 
quickly move to limit such rights. At the very least, emperors and kings 
will insist that they are the only ones with the power to order others 
put to death. 107 But under the Roman Republic there was no emperor; 
insofar as there was a sovereign body, it was the collective body of the 
slave-owners themselves. Only under the early Empire do we see any 
legislation limiting what owners could do to their (human) property: 
the first being a law of the time of the emperor Tiberius (dated 16 ad) 
stipulating that a master had to obtain a magistrate's permission before 
ordering a slave publicly torn apart by wild beasts. 108 However, the 
absolute nature of the master's power — the fact that in this context, he 
effectively was the state — also meant that there were also, at first, no 
restrictions on manumission: a master could liberate his slave, or even 
adopt him or her, whereby — since liberty meant nothing outside of 
membership in a community — that slave automatically became a Ro- 
man citizen. This led to some very peculiar arrangements. In the first 



century ad, for example, it was not uncommon for educated Greeks 
to have themselves sold into slavery to some wealthy Roman in need 
of a secretary, entrust the money to a close friend or family member, 
and then, after a certain interval, buy themselves back, thus obtaining 
Roman citizenship. This despite the fact that, during such time as they 
were slaves, if their owner decided to, say, cut one of his secretary's 
feet off, legally, he would have been perfectly free to do so. 109 

The relation of dominus and slave thus brought a relation of con- 
quest, of absolute political power into the household (in fact, made it 
the essence of the household). It's important to emphasize that this was 
not a moral relation on either side. A well-known legal formula, attrib- 
uted to a Republican lawyer named Quintus Haterius, brings this home 
with particular clarity. With the Romans as with the Athenians, for a 
male to be the object of sexual penetration was considered unbefitting 
to a citizen. In defending a freedman accused of continuing to provide 
sexual favors to his former master, Haterius coined an aphorism that 
was later to become something of a popular dirty joke: impudicitia in 
ingenuo crimen est, in servo necessitas, in liberto officium ("to be the 
object of anal penetration is a crime in the freeborn, a necessity for a 
slave, a duty for a freedman"). 110 What is significant here is that sexual 
subservience is considered the "duty" only of the freedman. It is not 
considered the "duty" of a slave. This is because, again, slavery was 
not a moral relation. The master could do what he liked, and there was 
nothing the slave could do about it. 

I I I I I 

The most insidious effect of Roman slavery, however, is that through 
Roman law, it has come to play havoc with our idea of human free- 
dom. The meaning of the Roman word libertas itself changed dra- 
matically over time. As everywhere in the ancient world, to be "free" 
meant, first and foremost, not to be a slave. Since slavery means above 
all the annihilation of social ties and the ability to form them, free- 
dom meant the capacity to make and maintain moral commitments to 
others. The English word "free," for instance, is derived from a Ger- 
man root meaning "friend," since to be free meant to be able to make 
friends, to keep promises, to live within a community of equals. This 
is why freed slaves in Rome became citizens: to be free, by definition, 
meant to be anchored in a civic community, with all the rights and 
responsibilities that this entailed. 111 

By the second century ad, however, this had begun to change. 
The jurists gradually redefined libertas until it became almost 



indistinguishable from the power of the master. It was the right to do 
absolutely anything, with the exception, again, of all those things one 
could not do. Actually, in the Digest, the definitions of freedom and 
slavery appear back to back: 

Freedom is .the natural faculty to do whatever one wishes that 
is not prevented by force or law. Slavery is an institution ac- 
cording to the law of nations whereby one person becomes 
private property {dominium) of another, contrary to nature." 2 

Medieval commentators immediately noticed the problem here. 113 
But wouldn't this mean that everyone is free? After all, even slaves are 
free to do absolutely anything they're actually permitted to do. To say 
a slave is free (except insofar as he isn't) is a bit like saying the earth 
is square (except insofar as it is round), or that the sun is blue (except 
insofar as it is yellow), or, again, that we have an absolute right to 
do anything we wish with our chainsaw (except those things that we 

In fact, the definition introduces all sorts of complications. If free- 
dom is natural, then surely slavery is unnatural, but if freedom and 
slavery are just matters of degree, then, logically, would not all restric- 
tions on freedom be to some degree unnatural? Would not that imply 
that society, social rules, in fact even property rights, are unnatural as 
well? This is precisely what many Roman jurists did conclude — that 
is, when they did venture to comment on such abstract matters, which 
was only rarely. Originally, human beings lived in a state of nature 
where all things were held in common; it was war that first divided up 
the world, and the resultant "law of nations," the common usages of 
mankind that regulate such matters as conquest, slavery, treaties, and 
borders, that was first responsible for inequalities of property as well. 114 

This in turn meant that there was no intrinsic difference between 
private property and political power — at least, insofar as that power 
was based in violence. As time went on, Roman emperors also began 
claiming something like dominium, insisting that within their domin- 
ions, they had absolute freedom — in fact, that they were not bound by 
laws." 5 At the same time, as Roman society shifted from a republic of 
slave-holders to arrangements that increasingly resembled later feudal 
Europe, with magnates on their great estates surrounded by dependent 
peasants, debt servants, and an endless variety of slaves — with whom 
they could largely do as they pleased. The barbarian invasions that 
overthrew the empire merely formalized the situation, largely eliminat- 
ing chattel slavery, but at the same time introducing the notion that the 



noble classes were really descendants of the Germanic conquerors, and 
that the common people were inherently subservient. 

Still, even in this new Medieval world, the old Roman concept 
of freedom remained. Freedom was simply power. When Medieval 
political theorists spoke of "liberty," they were normally referring to a 
lord's right to do whatever he wanted within his own domains. This 
was, again, usually assumed to be not something originally established 
by agreement, but a mere fact of conquest: one famous English legend 
holds that when, around 1290, King Edward I asked his lords to pro- 
duce documents to demonstrate by what right they held their franchises 
(or "liberties"), the Earl Warenne presented the king only with his rusty 
sword. 116 Like Roman dominium, it was less a right than a power, and 
a power exercised first and foremost over people — which is why in the 
Middle Ages it was common to speak of the "liberty of the gallows," 
meaning a lord's right to maintain his own private place of execution. 

By the time Roman law began to be recovered and modernized in 
the twelfth century, the term dominium posed a particular problem, 
since it had come, in ordinary church Latin of the time, to be used 
equally for "lordship" and "private property." Medieval jurists spent a 
great deal of time and argument establishing whether there was indeed 
a difference between the two. It was a particularly thorny problem 
because, if property rights really were, as the Digest insisted, a form of 
absolute power, it was very difficult to see how anyone could have it 
but a king — or even, for certain jurists, God. 117 

This is not the place to describe the resulting arguments, but I feel 
it's important to end here because in a way, it brings us full circle and 
allows us to understand precisely how Liberals like Adam Smith were 
able to imagine the world the way they did. This is a tradition that 
assumes that liberty is essentially the right to do what one likes with 
one's own property. In fact, not only does it make property a right; 
it treats rights themselves as a form of property. In a way, this is the 
greatest paradox of all. We are so used to the idea of "having" rights — 
that rights are something one can possess — that we rarely think about 
what this might actually mean. In fact (as Medieval jurists were well 
aware), one man's right is simply another's obligation. My right to free 
speech is others' obligation not to punish me for speaking; my right to 
a trial by a jury of my peers is the responsibility of the government to 
maintain a system of jury duty. The problem is just the same as it was 
with property rights: when we are talking about obligations owed by 
everyone in the entire world, it's difficult to think about it that way. It's 
much easier to speak of "having" rights and freedoms. Still, if freedom 
is basically our right to own things, or to treat things as if we own 



them, then what would it mean to "own" a freedom — wouldn't it have 
to mean that our right to own property is itself a form of property? 
That does seem unnecessarily convoluted. What possible reason would 
one have to want to define it this way? 118 

Historically, there is a simple — if somewhat disturbing — answer 
to this. Those who have argued that we are the natural owners of our 
rights and liberties have been mainly interested in asserting that we 
should be free to give them away, or even to sell them. 

Modern ideas of rights and liberties are derived from what, from 
the time when Jean Gerson, Rector of the University of Paris, began 
to lay them out around 1400, building on Roman law concepts, came 
to be known as "natural rights theory." As Richard Tuck, the premier 
historian of such ideas, has long noted, it is one of the great ironies 
of history that this was always a body of theory embraced not by the 
progressives of that time, but by conservatives. "For a Gersonian, lib- 
erty was property and could be exchanged in the same way and in the 
same terms as any other property" — sold, swapped, loaned, or other- 
wise voluntarily surrendered. 11 ' It followed that there could be nothing 
intrinsically wrong with, say, debt peonage, or even slavery. And this 
is exactly what natural-rights theorists came to assert. In fact, over the 
next centuries, these ideas came to be developed above all in Antwerp 
and Lisbon, cities at the very center of the emerging slave trade. After 
all, they argued, we don't really know what's going on in the lands be- 
hind places like Calabar, but there is no intrinsic reason to assume that 
the vast majority of the human cargo conveyed to European ships had 
not sold themselves, or been disposed of by their legal guardians, or 
lost their liberty in some other perfectly legitimate fashion. No doubt 
some had not, but abuses will exist in any system. The important thing 
was that there was nothing inherently unnatural or illegitimate about 
the idea that freedom could be sold. 120 

Before long, similar arguments came to be employed to justify the 
absolute power of the state. Thomas Hobbes was the first to really 
develop this argument in the seventeenth century, but it soon became 
commonplace. Government was essentially a contract, a kind of busi- 
ness arrangement, whereby citizens had voluntarily given up some of 
their natural liberties to the sovereign. Finally, similar ideas have be- 
come the basis of that most basic, dominant institution of our pres- 
ent economic life: wage labor, which is, effectively, the renting of our 
freedom in the same way that slavery can be conceived as its sale. 121 

It's not only our freedoms that we own; the same logic has come to 
be applied even to our own bodies, which are treated, in such formu- 
lations, as really no different than houses, cars, or furniture. We own 



ourselves, therefore outsiders have no right to trespass on us. 122 Again, 
this might seem an innocuous, even a positive notion, but it looks rath- 
er different when we take into consideration the Roman tradition of 
property on which it is based. To say that we own ourselves is, oddly 
enough, to cast ourselves as both master and slave simultaneously. 
"We" are both owners (exerting absolute power over our property), 
and yet somehow, at the same time, the things being owned (being the 
object of absolute power). The ancient Roman household, far from 
having been forgotten in the mists of history, is preserved in our most 
basic conception of ourselves — and, once again, just as in property 
law, the result is so strangely incoherent that it spins off into endless 
paradoxes the moment one tries to figure out what it would actually 
mean in practice. Just as lawyers have spent a thousand years trying to 
make sense of Roman property concepts, so have philosophers spent 
centuries trying to understand how it could be possible for us to have a 
relation of domination over ourselves. The most popular solution — to 
say that each of us has something called a "mind" and that this is com- 
pletely separate from something else, which we can call "the body," 
and that the first thing holds natural dominion over the second — flies in 
the face of just about everything we now know about cognitive science. 
It's obviously untrue, but we continue to hold onto it anyway, for the 
simple reason that none of our everyday assumptions about property, 
law, and freedom would make any sense without it. 123 


The first four chapters of this book describe a dilemma. We don't re- 
ally know how to think about debt. Or, to be more accurate, we seem 
to be trapped between imagining society in the Adam Smith mode, as a 
collection of individuals whose only significant relations are with their 
own possessions, happily bartering one thing for another for the sake 
of mutual convenience, with debt almost entirely abolished from the 
picture, and a vision in which debt is everything, the very substance of 
all human relations — which of course leaves everyone with the uncom- 
fortable sense that human relations are somehow an intrinsically taw- 
dry business, that our very responsibilities to one another are already 
somehow necessarily based in sin and crime. It's not an appealing set 
of alternatives. 

In the last three chapters I have tried to show that there is another 
way of looking at things, and then to describe how it is that we got 



here. This is why I developed the concept of human economies: ones 
in which what is considered really important about human beings is 
the fact that they are each a unique nexus of relations with others — 
therefore, that no one could ever be considered exactly equivalent to 
anything or anyone else. In a human economy, money is not a way 
of buying or trading human beings, but a way of expressing just how 
much one cannot do so. 

I then went on to describe how all this can begin to break down: 
how humans can become objects of exchange: first, perhaps, women 
given in marriage; ultimately, slaves captured in war. What all these 
relations have in common, I observed, was violence. Whether it is Tiv 
girls being tied up and beaten for running away from their husbands, 
or husbands being herded into slave ships to die on faraway planta- 
tions, that same principle always applies: it is only by the threat of 
sticks, ropes, spears, and guns that one can tear people out of those 
endlessly complicated webs of relationship with others (sisters, friends, 
rivals . . .) that render them unique, and thus reduce them to something 
that can be traded. 

All of this, it is important to emphasize, can happen in places where 
markets in ordinary, everyday goods — clothing, tools, foodstuffs — do 
not even exist. In fact, in most human economies, one's most important 
possessions could never be bought and sold for the same reasons that 
people can't: they are unique objects, caught up in a web of relation- 
ships with human beings. 124 

My old professor John Comaroff used to tell a story about car- 
rying out a survey in Natal, in South Africa. He had spent most of a 
week driving from homestead to homestead in a jeep with a box full 
of questionnaires and a Zulu-speaking interpreter, driving past appar- 
ently endless herds of cattle. After about six days, his interpreter sud- 
denly started and pointed into the middle of one herd. "Look!" he said. 
"That's the same cow! That one there — with the red spot on its back. 
We saw it three days ago in a place ten miles from here. I wonder what 
happened? Did someone get married? Or maybe there was a settlement 
to some dispute." 

In human economies, when this ability to rip people from their 
contexts does appear, it is most often seen as an end in itself. One can 
already see a hint of this among the Lele. Important men would occa- 
sionally acquire war captives from far away as slaves, but it was almost 
always to be sacrificed at their funeral. 125 The squelching of one man's 
individuality was seen as somehow swelling the reputation, the social 
existence, of the other. 126 In what I've been calling heroic societies, of 
course this kind of addition and subtraction of honor and disgrace is 



lifted from a somewhat marginal practice to become the very essence of 
politics. As endless epics, sagas, and eddas attest, heroes become heroes 
by making others small. In Ireland and Wales, we can observe how this 
very ability to degrade others, to remove unique human beings from 
their hearths and families and thus render them anonymous units of 
accounting — the Irish slave-girl currency, the Welsh washerwomen — is 
itself the highest expression of honor. 

In heroic societies, the role of violence is not hidden — it's glorified. 
Often, it can form the basis of one's most intimate relations. In the 
Iliad, Achilles sees nothing shameful in his relation with his slave-girl, 
Briseis, whose husband and brothers he killed; he refers to her as his 
"prize of honor," but almost in the very same breath, he also insists 
that, just any decent man must love and care for his household depen- 
dents, "so I from my heart loved this one, even though I won her with 
my spear." 127 

That such relations of intimacy can often develop between men of 
honor and those they have stripped of their dignity, history can well at- 
test. After all, the annihilation of any possibility of equality also elimi- 
nates any question of debt, of any relation other than power. It allows 
a certain clarity. This is presumably why emperors and kings have such 
a notorious tendency to surround themselves with slaves or eunuchs. 

There is something more here, though. If one looks across the ex- 
panse of history, one cannot help but notice a curious sense of identi- 
fication between the most exalted and the most degraded; particularly, 
between emperors and kings, and slaves. Many kings surround them- 
selves with slaves, appoint slave ministers — there have even been, as 
with the Mamluks in Egypt, actual dynasties of slaves. Kings surround 
themselves with slaves for the same reason that they surround them- 
selves with eunuchs: because the slaves and criminals have no families 
or friends, no possibility of other loyalties — or at least that, in prin- 
ciple, they shouldn't. But in a way, kings should really be like that too. 
As many an African proverb emphasizes: a proper king has no relatives 
either, or at least, he acts as if he does not. 128 In other words, the king 
and slave are mirror images, in that unlike normal human beings who 
are defined by their commitments to others, they are defined only by 
relations of power. They are as close to perfectly isolated, alienated 
beings as one can possibly become. 

At this point we can finally see what's really at stake in our pe- 
culiar habit of defining ourselves simultaneously as master and slave, 
reduplicating the most brutal aspects of the ancient household in our 
very concept of ourselves, as masters of our freedoms, or as owners 
of our very selves. It is the only way that we can imagine ourselves as 



completely isolated beings. There is a direct line from the new Roman 
conception of liberty — not as the ability to form mutual relationships 
with others, but as the kind of absolute power of "use and abuse" 
over the conquered chattel who make up the bulk of a wealthy Roman 
man's household — to the strange fantasies of liberal philosophers like 
Hobbes, Locke, and Smith, about the origins of human society in some 
collection of thirty- or forty-year-old males who seem to have sprung 
from the earth fully formed, then have to decide whether to kill each 
other or begin to swap beaver pelts. 129 

European and American intellectuals, it is true, have spent much 
of the last two hundred years trying to flee from the more disturbing 
implications of this tradition of thought. Thomas Jefferson, that owner 
of many slaves, chose to begin the Declaration of Independence by di- 
rectly contradicting the moral basis of slavery, writing "we hold these 
truths to be self-evident, that all men 'are created equal, and that they 
are endowed by their Creator with certain inalienable Rights . . ." — 
thus undercutting simultaneously any argument that Africans were 
racially inferior, and also that they or their ancestors could ever have 
been justly and legally deprived of their freedom. In doing so, however, 
he did not propose some radically new conception of rights and liber- 
ties. Neither have subsequent political philosophers. For the most part, 
we've just kept the old ones, but with the word "not" inserted here and 
there. Most of our most precious rights and freedoms are a series of 
exceptions to an overall moral and legal framework that suggests we 
shouldn't really have them in the first place. 

Formal slavery has been eliminated, but (as anyone who works 
from nine to five can testify) the idea that you can alienate your liberty, 
at least temporarily, endures. In fact, it determines what most of us 
have to do for most of our waking hours, except, usually, on weekends. 
The violence has been largely pushed out of sight. 130 But this is largely 
because we're no longer able to imagine what a world based on social 
arrangements that did not require the continual threat of tasers and 
surveillance cameras would even look like. 

Chapter Eight 


Bullion is the accessory of war, and not 
of peaceful trade. 

— Geoffrey W. Gardiner 

ONE MIGHT WELL ASK: If our political and legal ideas really are 
founded on the logic of slavery, then how did we ever eliminate slavery? 
Of course, a cynic might argue that we haven't; we've just relabeled it. 
The cynic would have a point: an ancient Greek would certainly have 
seen the distinction between a slave and an indebted wage laborer as, 
at best, a legalistic nicety. 1 Still, even the elimination of formal chat- 
tel slavery has to be considered a remarkable achievement, and it is 
worthwhile to wonder how it was accomplished. Especially since it was 
not just accomplished once. The truly remarkable thing, if one consults 
the historical record, is that slavery has been eliminated — or effectively 
eliminated — many times in human history. 

In Europe, for instance, the institution largely vanished in the 
centuries following the collapse of the Roman empire — an historical 
achievement rarely recognized by those of us used to referring to these 
events as the beginning of "the Dark Ages." 2 No one is quite sure how 
it happened. Most agree that the spread of Christianity must have had 
something to do with it, but that can't have been the direct cause, since 
the Church itself was never explicitly opposed to the institution and 
in many cases defended it. Instead, the abolition appears to have hap- 
pened despite the attitudes of both the intellectuals and the political 
authorities of the time. Yet it did happen, and it had lasting effects. 
On the popular level, slavery remained so universally detested that 
even a thousand years later, when European merchants started try- 
ing to revive the trade, they discovered that their compatriots would 



not countenance slaveholding in their own countries — one reason why 
planters were eventually obliged to acquire their slaves in Africa and 
set up plantations in the New World. 3 It is one of the great ironies 
of history that modern racism — probably the single greatest evil of 
our last two centuries — had to be invented largely because Europeans 
continued to refuse to listen to the arguments of the intellectuals and 
jurists and did not accept that anyone they believed to be a full and 
equal human being could ever be justifiably enslaved. 

What's more, the demise of ancient slavery was not limited to 
Europe. Remarkably, right around the same time — in the years around 
600 ad — we find almost exactly the same thing happening in India and 
China, where, over the course of centuries, amidst much unrest and 
confusion, chattel slavery largely ceased to exist. What all this suggests 
is that moments of historical opportunity — moments when meaningful 
change is possible — follow a distinct, even a cyclical pattern, one that 
has long been far more coordinated across geographical space than we 
would ever have imagined. There is a shape to the past, and it is only 
by understanding it that we can begin to have a sense of the historical 
opportunities that exist in the present. 

The easiest way to make these cycles visible is to reexamine exactly the 
phenomenon we've been concerned with over the course of this book: 
the history of money, debt, and credit. The moment we begin to map 
the history of money across the last five thousand years of Eurasian 
history, startling patterns begin to emerge. In the case of money, one 
event stands out above all others: the invention of coinage. Coinage 
appears to have arisen independently in three different places, almost 
simultaneously: on the Great Plain of northern China, in the Ganges 
river valley of northeast India, and in the lands surrounding the Aegean 
Sea, in each case, between roughly 600 and 500 bc. This wasn't due to 
some sudden technological innovation: the technologies used in mak- 
ing the first coins were, in each case, entirely different. 4 It was a social 
transformation. Why this happened in exactly this way is an historical 
mystery. But this much we know: for some reason, in Lydia, India, and 
China, local rulers decided that whatever longstanding credit systems 
had existed in their kingdoms were no longer adequate, and they began 
to issue tiny pieces of precious metals — metals that had previously been 
used largely in international commerce, in ingot form — and to encour- 
age their subjects to use them in day-to-day transactions. 



From there, the innovation spread. For more than a thousand 
years, states everywhere started issuing their own coinage. But then, 
right around 600 ad, about the time that slavery was disappearing, the 
whole trend was suddenly thrown into reverse. Cash dried up. Every- 
where, there was a movement back to credit once again. 

If we look at Eurasian history over the course of the last five thou- 
sand years, what we see is a broad alternation between periods domi- 
nated by credit money and periods in which gold and silver come to 
dominate — that is, those during which at least a large share of transac- 
tions were conducted with pieces of valuable metal being passed from 
hand to hand. 

Why? The single most important factor would appear to be war. 
Bullion predominates, above all, in periods of generalized violence. 
There's a very simple reason for that. Gold and silver coins are distin- 
guished from credit arrangements by one spectacular feature: they can 
be stolen. A debt is, by definition, a record, as well as a relation of 
trust. Someone accepting gold or silver in exchange for merchandise, 
on the other hand, need trust nothing more than the accuracy of the 
scales, the quality of the metal, and the likelihood that someone else 
will be willing to accept it. In a world where war and the threat of 
violence are everywhere — and this appears to have been an equally ac- 
curate description of Warring States China, Iron Age Greece, and pre- 
Mauryan India — there are obvious advantages to making one's trans- 
actions simple. This is all the more true when dealing with soldiers. 
On the one hand, soldiers tend to have access to a great deal of loot, 
much of which consists of gold and silver, and will always seek a way 
to trade it for the better things in life. On the other, a heavily armed 
itinerant soldier is the very definition of a poor credit risk. The econo- 
mists' barter scenario might be absurd when applied to transactions 
between neighbors in the same small rural community, but when deal- 
ing with a transaction between the resident of such a community and 
a passing mercenary, it suddenly begins to make a great deal of sense. 

For much of human history, then, an ingot of gold of silver, 
stamped or not, has served the same role as the contemporary drug 
dealer's suitcase full of unmarked bills: an object without a history, 
valuable because one knows it will be accepted in exchange for other 
goods just about anywhere, no questions asked. As a result, while 
credit systems tend to dominate in periods of relative social peace, or 
across networks of trust (whether created by states or, in most periods, 
transnational institutions like merchant guilds or communities of faith), 
in periods characterized by widespread war and plunder, they tend to 
be replaced by precious metal. What's more, while predatory lending 



goes on in every period of human history, the resulting debt crises ap- 
pear to have the most damaging effects at times when money is most 
easily convertible into cash. 

As a starting point to any attempt to discern the great rhythms 
that define the current historical moment, let me propose the following 
breakdown of Eurasian history according to the alternation between 
periods of virtual and metal money. The cycle begins with the Age of 
the First Agrarian Empires (3500-800 bc), dominated by virtual credit 
money. This is followed by the Axial Age (800 BC-600 ad), which will 
be covered in the next chapter, and which saw the rise of coinage and 
a general shift to metal bullion. The Middle Ages (600-1450 ad), which 
saw a return to virtual credit money, will be covered in chapter 10; 
chapter 11 will cover the next turn of the cycle, the Age of Capitalist 
Empires, which began around 1450 with a massive planetary switch 
back to gold and silver bullion, and which could only really be said 
to have ended in 1971, when Richard Nixon announced that the U.S. 
dollar would no longer be redeemable in gold. This marked the begin- 
ning of yet another phase of virtual money, one which has only just 
begun, and whose ultimate contours are, necessarily, invisible. Chapter 
12, the final chapter, will be devoted to applying the insights of history 
to understanding what it might mean and the opportunities it might 
throw open. 

(3500-800 BC) 

We have already had occasion to note the predominance of credit 
money in Mesopotamia, the earliest urban civilization that we know 
about. In the great temple and palace complexes, not only did money 
serve largely as an accounting measure rather than physically changing 
hands, merchants and tradespeople developed credit arrangements of 
their own. Most of these took the physical form of clay tablets, in- 
scribed with some obligation of future payment, that were then sealed 
inside clay envelopes and marked with the borrower's seal. The credi- 
tor would keep the envelope as a surety, and it would be broken open 
on repayment. In some times or places at least, these bullae appear to 
have become what we would now call negotiable instruments, since 
the tablet inside did not simply record a promise to pay the original 
lender, but was designated "to the bearer" — in other words, a tablet 
recording a debt of five shekels of silver (at prevailing rates of interest) 



could circulate as the equivalent of a five-shekel promissory note — that 
is, as money. 5 

We don't know how often this happened; how many hands such 
tablets would typically pass through, how many transactions were 
based on credit, how often merchants actually did weigh out silver in 
rough chunks to buy and sell their merchandise, or when they were 
most likely to do so. No doubt all this varied over time. Promissory 
notes usually circulated within merchant guilds, or between inhabitants 
of the relatively well-off urban neighborhoods where people knew one 
another well enough to trust them to be accountable, but not so well 
that they could rely on one another for more traditional forms of mu- 
tual aid. 6 We know even less about the marketplaces frequented by or- 
dinary Mesopotamians, except that tavern-keepers operated on credit, 
and hawkers and operators of market stalls probably did as well. 7 

The origins of interest will forever remain obscure, since they pre- 
ceded the invention of writing. The terminology for interest in most 
ancient languages is derived from some word for "offspring," causing 
some to speculate that it originates in loans of livestock, but this seems 
a bit literal-minded. More likely, the first widespread interest-bearing 
loans were commercial: temples and palaces would forward wares to 
merchants and commercial agents, who would then trade them in near- 
by mountain kingdoms or on trading expeditions overseas. 8 

The practice is significant because it implies a fundamental lack 
of trust. After all, why not simply demand a share in the profits? This 
seems more fair (a merchant who came back bankrupt would probably 
have little means of paying anyway), and profit-sharing partnerships 
of this sort became common practice in the later Middle East. 9 The 
answer seems to be that profit-sharing partnerships were typically con- 
tracted between merchants, or anyway people of similar background 
and experience who had ways of keeping track of one another. Palace 
or temple bureaucrats and world-roaming merchant adventurers had 
little in common, and the bureaucrats seem to have concluded that one 
could not normally expect a merchant returned from a far-off land to 
be entirely honest about his adventures. A fixed interest rate would 
render irrelevant whatever elaborate tales of robbery, shipwreck, or 
attacks by winged snakes or elephants a creative merchant might have 
concocted. The return was fixed in advance. 

This connection between borrowing and lying, incidentally, is an 
important one to history. Herodotus remarked about the Persians: "To 
tell a lie is considered by them the greatest disgrace, and next to that 
to be in debt . . . especially because they think that one in debt must of 
necessity tell lies." 10 (Later, Herodotus reported a story told to him by 



a Persian about the origins of the gold that the Persians had acquired 
in India: they stole it from the nests of giant ants.) 11 Jesus's parable of 
the unforgiving servant makes a joke out of the matter ("Ten thousand 
talents? No problem. Just give me a little more time"), but even here, 
one can see how such endless falsehoods contributed to a broader sense 
that a world in which moral relations are conceived as debts is also, 
while in certain ways entertaining, necessarily a world of corruption, 
guilt, and sin. 

By the time of the earliest Sumerian documents, this world may 
not yet have arrived. Still, the principle of lending at interest, even 
compound interest, was already familiar to everyone. In 2402 bc, for 
instance, a royal inscription by King Enmetena of Lagash — one of the 
earliest we have — complains that his enemy, the King of Umma, had 
been occupying a huge stretch of farmland that had rightfully belonged 
to Lagash for decades. He announces: if one were to calculate the 
rental fees for all that land, then the interest that would have been due 
on that rent, compounded annually, it would reveal that Umma now 
owes Lagash four and a half trillion liters of barley. The sum was, as in 
the parable, intentionally preposterous. 12 It was just an excuse to start 
a war. Still, he wanted everyone to know that he knew exactly how to 
do the math. 

Usury — in the sense of interest-bearing consumer loans — was also 
well established by Enmetena's time. The king ultimately had his war 
and won it, and two years later, fresh off his victory, he was forced to 
publish another edict: this one, a general debt cancellation within his 
kingdom. As he later boasted, "he instituted freedom {amargi) in La- 
gash. He restored the child to its mother, and the mother to her child; 
he cancelled all interest due." 13 This was, in fact, the very first such 
declaration we have on record — and the first time in history that the 
word "freedom" appears in a political document. 

Enmetena's text is a bit vague on the details, but a half-century 
later, when his successor Uruinimgina declared a general amnesty dur- 
ing the New Year's ceremonies of 2350 bc, the terms are all spelled out, 
and they conform to what was to become typical of such amnesties: 
cancelling not only all outstanding loans, but all forms of debt servi- 
tude, even those based on failure to pay fees or criminal penalties — the 
only thing excepted being commercial loans. 

Similar declarations are to be found again and again, in Sumerian 
and later Babylonian and Assyrian records, and always with the same 
theme: the restoration of "justice and equity," the protection of wid- 
ows and orphans, to ensure — as Hammurabi was to put it when he 



abolished debts in Babylon in 1761 bc — "that the strong might not op- 
press the weak." 14 In the words of Michael Hudson, 

The designated occasion for clearing Babylonia's financial slate 
was the New Year festival, celebrated in the spring. Babylo- 
nian rulers oversaw the ritual of "breaking the tablets," that 
is, the debt records, restoring economic balance as part of the 
calendrical renewal of society along with the rest of nature. 
Hammurabi and his fellow rulers signaled these proclamations 
by raising a torch, probably symbolizing the sun-god of justice 
Shamash, whose principles were supposed to guide wise and 
fair rulers. Persons held as debt pledges were released to rejoin 
their families. Other debtors were restored cultivation rights 
to their customary lands, free of whatever mortgage liens had 
accumulated. 1 ' 

Over the next several thousand years, this same list — cancelling the 
debts, destroying the records, reallocating the land — was to become 
the standard list of demands of peasant revolutionaries everywhere. In 
Mesopotamia, rulers appear to have headed off the possibility of unrest 
by instituting such reforms themselves, as a grand gesture of cosmic 
renewal, a recreation of the social universe — in Babylonia, during the 
same ceremony in which the king reenacts his god Marduk's creation 
of the physical universe. The history of debt and sin was wiped out, 
and it was time to begin again. But it's also clear what they saw as 
the alternative: the world plunged into chaos, with farmers defect- 
ing to swell the ranks of nomadic pastoralists, and ultimately, if the 
breakdown continued, returning to overrun the cities and destroy the 
existing economic order entirely. 


(2650-716 BC) 

Egypt represents an interesting contrast, since for most of its history, 
it managed to avoid the development of interest-bearing debt entirely. 

Egypt was, like Mesopotamia, extraordinarily rich by ancient stan- 
dards, but it was also a self-contained society, a river running through 
a desert, and far more centralized than Mesopotamia. The pharaoh 
was a god, and the state and temple bureaucracies had their hands 
in everything: there were a dazzling array of taxes and a continual 



distribution of allotments, wages, and payments from the state. Here, 
too, money clearly arose as a means of account. The basic unit was 
the deben, or "measure" — originally referring to measures of grain, and 
later of copper or silver. A few records make clear the catch-as-catch- 
can nature of most transactions: 

In the 15th year of Ramses II [c. 1275 BC] a merchant offered 
the Egyptian lady Erenofre a Syrian slave girl whose price, no 
doubt after bargaining, was fixed at 4 deben 1 kite [about 373 
grams] of silver. Erenofre made up a collection of clothes and 
blankets to the value of 2 deben 2 1/3 kite — the details are set 
out in the record — and then borrowed a miscellany of objects 
from her neighbors — bronze vessels, a pot of honey, ten shirts, 
ten deben of copper ingots — till the price was made up. 16 

Most merchants were itinerant, either foreigners or commercial 
agents for the owners of large estates. There's not much evidence for 
commercial credit, however; loans in Egypt were still more likely to 
take the form of mutual aid between neighbors. 17 

Substantial, legally enforceable loans, the kind that can lead to the 
loss of lands or family members, are documented, but they appear to 
have been rare — and much less pernicious, as the loans did not bear 
interest. Similarly, we do occasionally hear of debt-bondservants, and 
even debt slaves, but these seem to have been unusual phenomena and 
there's no suggestion that matters ever reached crisis proportions, as 
they so regularly did in Mesopotamia and the Levant. 18 

In fact, for the first several thousand years, we seem to be in a 
somewhat different world, where debt really was a matter of "guilt" 
and treated largely as a criminal matter: 

When a debtor failed to repay his debt on time, his creditor 
could take him to court, where the debtor would be required 
to promise to pay in full by a specific date. As part of his 
promise — which was under oath — the debtor also pledged to 
undergo 100 blows and/or repay twice the amount of the origi- 
nal loan if he failed to pay by the date specified. 19 

The "and/or" is significant. There was no formal distinction be- 
tween a fine and a beating. In fact, the entire purpose of the oath 
(rather like the Cretan custom of having a borrower pretend to snatch 
the money) seems to have been to create the justification for punitive 
action: so the debtor could be punished as either a perjurer or a thief. 20 



By the time of the New Kingdom (1550-1070) there is more evi- 
dence for markets, but it's only by the time we reach the Iron Age, 
just before Egypt was absorbed into the Persian empire, that we begin 
to see evidence for Mesopotamian-style debt crises. Greek sources, for 
instance, record that the Pharaoh Bakenranef (reigned 720-715 bc) is- 
sued a decree abolishing debt bondage and annulling all outstanding 
liabilities, since "he felt it would be absurd for a soldier, perhaps at 
the moment when he was setting forth to fight for his fatherland, to 
be hauled off to prison by his creditor for an unpaid loan" — which, 
if true, is also one of the earliest mentions of a debt prison. 21 Under 
the Ptolemies, the Greek dynasty that ruled Egypt after Alexander, 
periodic clean slates had become institutionized. It's well known that 
the Rosetta Stone, written both in Greek and Egyptian, proved to be 
the key that made it possible to translate Egyptian hieroglyphics. Few 
are aware of what it actually says. The stela was originally raised to 
announce an amnesty, both for debtors and for prisoners, declared by 
Ptolemy V in 196 bc. 22 


(2200-771 BC) 

We can say almost nothing about Bronze Age India, since its writ- 
ing remains indecipherable, and not much more about Early China. 
What little we do know — mainly culled from dribs and drabs in later 
literary sources — suggests that the earliest Chinese states were far less 
bureaucratic than their western cousins. 23 There being no centralized 
temple or palace system with priests and administrators managing the 
storerooms and recording inputs and outputs, there was also little in- 
centive to create a single, uniform unit of account. Instead, the evidence 
suggests a different path, with social currencies of various sorts still 
holding sway in the countryside and being converted to commercial 
purposes in dealings between strangers. 

Later sources recall that early rulers "used pearls and jade as their 
superior method of payment, gold as their middle method of pay- 
ment, and knives and spades as their lower method of payment." 24 The 
author can only be talking about gifts here, and hierarchical ones at 
that: kings and great magnates rewarding their followers for services 
in theory rendered voluntarily. In most places, long strings of cowrie 
shells figure prominently, but even here, though we often hear of "the 
cowrie money of early China," and it's easy enough to find texts in 



which the value of sumptuous gifts are measured in cowries, it's never 
clear whether people were really carrying them around to buy and sell 
things in the marketplace. 25 

The most likely interpretation is that they were carrying the shells, 
but for a long time marketplaces themselves were of minor significance, 
so this use was not nearly as important as the usual uses for social 
currencies: marriage presents, fines, fees, and tokens of honor. 26 At any 
rate, all sources insist that there was a wide variety of currencies in cir- 
culation. As David Scheidel, one of the premier contemporary scholars 
of early money, notes: 

In pre-imperial China, money took the form of cowrie shells, 
both originals and — increasingly — bronze imitations, tor- 
toise shells, weighed gold and (rarely) silver bars, and most 
notably — from at least iooo BC onward — utensil money in the 
shape of spade blades and knives made of bronze. 27 

These were most often used between people who didn't know each 
other very well. For tabulating debts between neighbors, with local 
vendors, or with anything having to do with the government, people 
appear to have employed a variety of credit instruments: later Chi- 
nese historians claimed that the earliest of these were knotted strings, 
rather like the Inca khipu system, and then later, notched strips of 
wood or bamboo. 28 As in Mesopotamia, these appear to have long 
predated writing. 

We don't really know when the practice of lending at interest 
first reached China either, or whether Bronze Age China came to see 
the same sorts of debt crises as occurred in Mesopotamia, but there 
are tantalizing hints in later documents. 29 For instance, later Chinese 
legends about the origin of coinage ascribed the invention to emper- 
ors trying to relieve the effects of natural disasters. One early Han 
text reports: 

In ancient times, during the floods of Yu and the droughts of 
Tang, the common people became so exhausted that they were 
forced to borrow from one another in order to obtain food 
and clothing. [Emperor] Yu coined money for his people from 
the gold of Mount Li and [Emperor] Tang did likewise from 
the copper of Mount Yan. Therefore the world called them 



Other versions are a little more explicit. The Guanzi, a collection 
that in early imperial China became the standard primer on political 
economy, notes "There were people who lacked even gruel to eat, and 
who were forced to sell their children. To rescue these people, Tang 
coined money." 31 

The story is clearly fanciful (the real origins of coined money were 
at least a thousand years later), and it is very hard to know what to 
make of it. Could this reflect a memory of children being taken away as 
debt sureties? On the face of it, it seems more like starving people sell- 
ing their children outright — a practice that was later to become com- 
monplace in certain periods of Chinese history. 32 But the juxtaposition 
of loans and the sale of children is suggestive, especially considering 
what was happening on the other side of Asia at exactly the same time. 
The Guanzi later goes on to explain that these same rulers instituted 
the custom of retaining 30 percent of the harvest in public granaries 
for redistribution in emergencies, so as to ensure that this would never 
happen again. In other words, they began to set up just the kind of 
bureaucratic storage facilities that, in places like Egypt and Mesopota- 
mia, had been responsible for creating money as a unit of account to 
begin with. 

Chapter Nine 

(800 BC - 600 AD) 

Let us designate this period as the 
"axial age." Extraordinary events are 
crowded into this period, in China lived 
Confucius and Lao Tse, all the trends in 
■Chinese philosophy arose . . . In India 
it was the age of the Upanishads and of 
Buddha; as in China, all philosophical 
trends, including skepticism and ma- 
terialism, sophistry and nihilism, were 

— Karl Jaspers, Way to Wisdom 

THE PHRASE "THE AXIAL AGE" was coined by the German existen- 
tialist philosopher Karl Jaspers. 1 In the course of writing a history of 
philosophy, Jaspers became fascinated by the fact that figures like Py- 
thagoras (570-495 bc), the Buddha (563-483 bc), and Confucius (551-479 
bc), were all alive at exactly the same time, and that Greece, India, and 
China, in that period, all saw a sudden efflorescence of debate between 
contending intellectual schools, each group apparently, unaware of 
the others' existence. Like the simultaneous invention of coinage, why 
this happened had always been a puzzle. Jaspers wasn't entirely sure 
himself. To some extent, he suggested, it must have been an effect of 
similar historical conditions. For most of the great urban civilizations 
of the time, the early Iron Age was a kind of pause between empires, 
a time when political landscapes were broken into a checkerboard of 
often diminutive kingdoms and city-states, most often at constant war 
externally and locked in constant political debate within. Each case 
witnessed the development of something akin to a drop-out culture, 



with ascetics and sages fleeing to the wilderness or wandering from 
town to town seeking wisdom; in each, too, they were eventually reab- 
sorbed into the political order as a new kind of intellectual or spiritual 
elite, whether as Greek sophists, Jewish prophets, Chinese sages, or 
Indian holy men. 

Whatever the reasons, the result, Jaspers argued, was the first pe- 
riod in history in which human beings applied principles of reasoned 
inquiry to the great questions of human existence. He observed that all 
these great regions of the world, China, India, and the Mediterranean, 
saw the emergence of remarkably parallel philosophical trends, from 
skepticism to idealism — in fact, almost the entire range of positions 
about the nature of the cosmos, mind, action, and the ends of human 
existence that have remained the stuff of philosophy to this day. As one 
of Jaspers' disciples later put it — overstating only slightly — "no really 
new ideas have been added since that time." 2 

For Jaspers, the period begins with the Persian prophet Zoroaster, 
around 800 bc, and ends around 200 bc, to be followed by a Spiritual 
Age that centers on figures like Jesus and Mohammed. For my own 
purposes, I find it more useful to combine the two. Let us define the 
Axial Age, then, as running from 800 bc to 600 ad. 3 This makes the 
Axial Age the period that saw the birth not only of all the world's 
major philosophical tendencies, but also, all of today's major world 
religions: Zoroastrianism, Prophetic Judaism, Buddhism, Jainism, Hin- 
duism, Confucianism, Taoism, Christianity, and Islam. 4 

The attentive reader may have noticed that the core period of 
Jasper's Axial age — the lifetimes of Pythagoras, Confucius, and the 
Buddha — corresponds almost exactly to the period in which coinage 
was invented. What's more, the three parts of the world where coins 
were first invented were also the very parts of the world where those 
sages lived; in fact, they became the epicenters of Axial Age religious 
and philosophical creativity: the kingdoms and city-states around the 
Yellow River in China, the Ganges valley in northern India, and the 
shores of the Aegean Sea. 

What was the connection? We might start by asking: What is a 
coin? The normal definition is that a coin is a piece of valuable metal, 
shaped into a standardized unit, with some emblem or mark inscribed 
to authenticate it. The world's first coins appear to have been cre- 
ated within the kingdom of Lydia, in western Anatolia (now Turkey), 
sometime around 600 BC. 5 These first Lydian coins were basically just 
round lumps of electrum — a gold-silver alloy that occurred naturally in 
the nearby Pactolus River — that had been heated, then hammered with 
some kind of insignia. The very first, stamped only with a few letters, 



appear to have been manufactured by ordinary jewelers, but these dis- 
appeared almost instantly, replaced by coins manufactured in a newly 
established royal mint. Greek cities on the Anatolian coast soon began 
to strike their own coins, and they came to be adopted in Greece itself; 
the same thing occurred in the Persian Empire after it absorbed Lydia 
in 547 bc. 

In both India and China, we can observe the same pattern: invent- 
ed by private citizens, coinage was quickly monopolized by the state. 
The first Indian money, which seems to have appeared at some point 
in the sixth century, consisted of bars of silver trimmed down to uni- 
form weights, then punch-marked with some kind of official symbol. 6 
Most of the examples discovered by archaeologists contain numerous 
additional counter-punches, presumably added much in the way that a 
check or other credit instrument is endorsed before being transferred. 
This strongly suggests that they were being handled by people used to 
dealing with more abstract credit instruments. 7 Much early Chinese 
coinage also shows signs of having evolved directly from social curren- 
cies: some were in fact cast bronze in the shape of cowries, though oth- 
ers took the shape of diminutive knives, disks, or spades. In every case, 
local governments quickly stepped in — presumably within the space of 
about a generation. 8 However, since in each of the three areas there 
was a plethora of tiny states, this meant that each ended up with a 
wide variety of different currency systems. For example, around 700 bc, 
northern India was still divided into Janapadas or "tribal territories," 
some of them monarchies and some republics, and in the sixth century 
there were still at least sixteen major kingdoms. In China, this was the 
period where the old Zhou Empire first devolved into vying principali- 
ties (the "Spring and Autumn" period, 722-481 bc), then splintered into 
the chaos of the "Warring States" (475-221 bc.) Like the Greek city- 
states, all of the resulting kingdoms, no matter how diminutive, aspired 
to issue their own official currency. 

Recent scholarship has shed a great deal of light on how this must 
have happened. Gold, silver, and bronze — the materials from which 
coins were made — had long been the media of international trade; but 
until that time, only the rich had actually had much in their possession. 
A typical Sumerian farmer may well have never had occasion to hold a 
substantial piece of silver in his hand, except perhaps at his wedding. 
Most precious metals took the form of wealthy women's anklets and 
heirloom chalices presented by kings to their retainers, or it was simply 
stockpiled in temples, in ingot form, as sureties for loans. Somehow, 
during the Axial Age, all this began to change. Large amounts of silver, 
gold, and copper were dethesaurized, as the economic historians like 



to say; it was removed from the temples and houses of the rich and 
placed in the hands of ordinary people, was broken into tinier pieces, 
and began to be used in everyday transactions. 

How? Israeli Classicist David Schaps provides the most plausible 
suggestion: most of it was stolen. This was a period of generalized war- 
fare, and it is in the nature of war that precious things are plundered. 

Soldiers who plunder may indeed go first for the women, the 
alcoholic drinks, or the food, but they will also be looking 
around for things of value that are easily portable. A long-term 
standing army will tend to accumulate many things that are 
valuable and portable — and the most valuable and portable 
items are precious metals and precious stones. It may well have 
been the protracted wars among the states of these areas that 
first produced a large population of people with precious metal 
in their possession and a need for everyday necessities . . . 

Where there are people who want to buy there will be peo- 
ple willing to sell, as innumerable tracts on black markets, 
drug dealing, and prostitution point out . . . The constant 
warfare of the archaic age of Greece, of the Janapadas of In- 
dia, of the Warring States of China, was a powerful impetus 
for the development of market trade, and in particular for 
market trade based on the exchange of precious metal, usually 
in small amounts. If plunder brought precious metal into the 
hands of the soldiers, the market will have spread it through 
the population. 9 

Now, one might object: but surely, war and plunder were noth- 
ing new. The Homeric epics, for instance, show a well-nigh obsessive 
interest in the division of the spoils. True, but what the Axial Age also 
saw — again, equally in China, India, and the Aegean — was the rise of 
a new kind of army, made up not of aristocratic warriors and their 
retainers, but trained professionals. The period when the Greeks began 
to use coinage, for instance, was also the period when they developed 
their famous phalanx tactics, which required constant drill and training 
of the hoplite soldiers. The results were so extraordinarily effective that 
Greek mercenaries were soon being sought after from Egypt to Crimea. 
But unlike the Homeric retainers, who could simply be ignored, an 
army of trained mercenaries needs to be rewarded in some meaningful 
way. One could perhaps provide them all with livestock, but livestock 
are hard to transport; or with promissory notes, but these would be 



worthless in the mercenaries' own country. Allowing each a tiny share 
of the plunder does seem an obvious solution. 

These new armies were, directly or indirectly, under the control of 
governments, and it took governments to turn these chunks of metal 
into genuine currency. The main reason for this is simply scale: to cre- 
ate enough coins that the people could begin to use them in everyday 
transactions required mass production on a scale far beyond the abili- 
ties of local merchants or smiths. 10 Of course we have already seen why 
governments might have incentive to do so: the existence of markets 
was highly convenient for governments, and not just because it made it 
so much easier for them to provision large standing armies. By insist- 
ing that only their own coins were acceptable as fees, fines, or taxes, 
governments were able to overwhelm the innumerable social currencies 
that already existed in their hinterlands, and to establish something like 
uniform national markets. 

Actually, one theory is that the very first Lydian coins were in- 
vented explicitly to pay mercenaries. 11 This might help explain why 
the Greeks, who supplied most of the mercenaries, so quickly became 
accustomed to the use of coins, and why the use of coinage spread so 
quickly across the Hellenic world, so that by 480 bc there were at least 
one hundred mints operating in different Greek cities, even though at 
that time, none of the great trading nations of the Mediterranean had 
as yet showed the slightest interest in them. The Phoenicians, for exam- 
ple, were considered the greatest merchants and bankers of antiquity. 12 
They were also great inventors, having been the first to develop both 
the alphabet and the abacus. Yet for centuries after the invention of 
coinage, they preferred to continue conducting business as they always 
had, with unwrought ingots and promissory notes. 13 Phoenician cities 
struck no coins until 365 bc, and while Carthage, the great Phoenician 
colony in North Africa that came to dominate commerce in the West- 
ern Mediterranean, did so a bit earlier, it was only when "forced to do 
so to pay Sicilian mercenaries; and its issues were marked in Punic, 'for 
the people of the camp."' 14 

On the other hand, in the extraordinary violence of the Axial Age, 
being a "great trading nation" (rather than, say, an aggressive military 
power like Persia, Athens, or Rome) was not, ultimately, a winning 
proposition. The fate of the Phoenician cities is instructive. Sidon, the 
wealthiest, was destroyed by the Persian emperor Artaxerxes III after 
a revolt in 351 BC. Forty thousand of its inhabitants are said to have 
committed mass suicide rather than surrender. Nineteen years later, 
Tyre was destroyed after a prolonged siege by Alexander: ten thousand 
died in battle, and the thirty thousand survivors were sold into slavery. 



Carthage lasted longer, but when Roman armies finally destroyed the 
city in 146 bc, hundreds of thousands of Carthaginians were said to 
have been raped and slaughtered, and fifty thousand captives put on 
the auction block, after which the city itself was razed and its fields 
sowed with salt. 

All this may bring home something of the level of violence amidst 
which Axial Age thought developed. 15 But it also leaves us asking: 
What exactly was the ongoing relation among coinage, military power, 
and this unprecedented outpouring of ideas? 

The Mediterranean 

Here again our best information is from the Mediterranean world, 
and I have already provided some of its outlines. Comparing Athens — 
with its far-flung naval empire — and Rome, we can immediately detect 
striking similarities. In each city, history begins with a series of debt 
crises. In Athens, the first crisis, the one that culminated in Solon's 
reforms of 594 bc, was so early that coinage could hardly have been 
a factor. In Rome, too, the earliest crises seem to have proceeded the 
advent of currency. Rather, in each case, coinage became a solution. 
In brief, one might say that these conflicts over debt had two possible 
outcomes. The first was that the aristocrats could win, and the poor 
remain "slaves of the rich" — which in practice meant that most people 
would end up clients of some wealthy patron. Such states were gener- 
ally militarily ineffective. 16 The second was that popular factions could 
prevail, institute the usual popular program of redistribution of lands 
and safeguards against debt peonage, thus creating the basis for a class 
of free farmers whose children would, in turn, be free to spend much 
of their time training for war. 17 

Coinage played a critical role in maintaining this kind of free 
peasantry — secure in their landholding, not tied to any great lord by 
bonds of debt. In fact, the fiscal policies of many Greek cities amounted 
to little more than elaborate systems for the distribution of loot. It's 
important to emphasize that few ancient cities, if any, went so far as 
to outlaw predatory lending, or even debt peonage, entirely. Instead, 
they threw money at the problem. Gold, and especially silver, were ac- 
quired in war, or mined by slaves captured in war. Mints were located 
in temples (the traditional place for depositing spoils), and city-states 
developed endless ways to distribute coins, not only to soldiers, sail- 
ors, and those producing arms or outfitting ships, but to the populace 



generally, as jury fees, fees for attending public assemblies, or some- 
times just as outright distributions, as Athens did most famously when 
they discovered a new vein of silver in the mines at Laurium in 483 bc. 
At the same time, insisting that the same coins served as legal tender 
for all payments due to the state guaranteed that they would be in suf- 
ficient demand that markets would soon develop. 

Many of the political crises in ancient Greek cities similarly turned 
on the distribution of the spoils. Here is another incident recorded in 
Aristotle, who provides a conservative take on the origins of a coup 
in the city of Rhodes around 391 bc ("demagogues" here refers to the 
leaders of the democracy): 

The demagogues needed money to pay the people for attend- 
ing the assembly and serving on juries; for if the people did 
not attend, the demagogues would lose their influence. They 
raised at least some of the money they needed by preventing 
the disbursement of the money due the trireme [warship] com- 
manders under their contracts with the city to build and fit 
triremes for the Rhodian navy. Since the trireme commanders 
were not paid, they were unable in turn to pay their suppliers 
and workers, who sued the trireme commanders. To escape 
these lawsuits the trireme commanders banded together and 
overthrew the democracy. 18 

It was slavery, though, that made all this possible. As the figures 
concerning Sidon, Tyre, and Carthage suggest, enormous numbers of 
people were being enslaved in many of these conflicts, and, of course, 
many slaves ended up working in the mines, producing even more gold, 
silver, and copper. (The mines in Laurium reportedly employed ten to 
twenty thousand of them.) 19 

Geoffrey Ingham calls the resulting system a "military-coinage 
complex" — though I think it would be more accurate to call it a 
"military-coinage-slavery complex." 20 Anyway, that describes rather 
nicely how it worked in practice. When Alexander set out to conquer 
the Persian Empire, he borrowed much of the money with which to pay 
and provision his troops, and he minted his first coins, used to pay his 
creditors and continue to support the money, by melting down gold and 
silver plundered after his initial victories. 21 However, an expeditionary 
force needed to be paid, and paid well: Alexander's army, which num- 
bered some 120,000 men, required half a ton of silver a day just for 
wages. For this reason, conquest meant that the existing Persian system 
of mines and mints had to be reorganized around providing for the 



invading army; and ancient mines, of course, were worked by slaves. In 
turn, most slaves in mines were war captives. Presumably most of the 
unfortunate survivors of the siege of Tyre ended up working in such 
mines. One can see how this process might feed upon itself. 22 

Alexander was also the man responsible for destroying what re- 
mained of the ancient credit systems, since not only the Phoenicians 
but also the old Mesopotamian heartland had resisted the new coin 
economy. His armies not only destroyed Tyre; they also dethesaurized 
the gold and silver reserves of Babylonian and Persian temples, the 
security on which their credit systems were based, and insisted that 
all taxes to his new government be paid in his own money. The result 
was to "release the accumulated specie of century onto the market in a 
matter of months," something like 180,000 talents, or in contemporary 
terms, an estimated $285 billion. 23 

The Hellenistic successor kingdoms established by Alexander's gen- 
erals, from Greece to India, employed mercenaries rather than national 
armies, but the story of Rome is, again, similar to that of Athens. Its 
early history, as recorded by official chroniclers like Livy, is one of 
continual struggles between patricians and plebians, and of continual 
crises over debt. Periodically, these would lead to what were called mo- 
ments of "the secession of the plebs," when the commoners of the city 
abandoned their fields and workshops, camped outside the city, and 
threatened mass defection — an interesting halfway point between the 
popular revolts of Greece and the strategy of exodus typically pursued 
in Egypt and Mesopotamia. Here, too, the patricians were ultimately 
faced with a decision: they could use agricultural loans to gradually 
turn the plebian population into a class of bonded laborers on their 
estates, or they could accede to popular demands for debt protection, 
preserve a free peasantry, and employ the younger sons of free farm 
families as soldiers. 24 As the prolonged history of crises, secessions, 
and reforms makes clear, the choice was made grudgingly. 25 The plebs 
practically had to force the senatorial class to take the imperial option. 
Still, they did, and over time they gradually presided over the establish- 
ment of a welfare system that recycled at least a share of the spoils to 
soldiers, veterans, and their families. 

It seems significant, in this light, that the traditional date of the 
first Roman coinage — 338 BC — is almost exactly the date when debt 
bondage was finally outlawed (326 bc). 26 Again, coinage, minted from 
war spoils, didn't cause the crisis. It was used as a solution. 

In fact, the entire Roman empire, at its height, could be understood 
as a vast machine for the extraction of precious metals and their coin- 
ing and distribution to the military — combined with taxation policies 



designed to encourage conquered populations to adopt coins in their 
everyday transactions. Even so, for most of its history, use of coins was 
heavily concentrated in two regions: in Italy and a few major cities, 
and on the frontiers, where the legions were actually stationed. In areas 
where there were neither mines nor military operations, older credit 
systems presumably continued to operate. 

I will add one final note here. In Greece as in Rome, attempts to 
solve the debt crisis through military expansion were always, ultimate- 
ly, just ways of fending off the problem — and they only worked for a 
limited period of time. When expansion stopped, everything returned 
to as it had been before. Actually, it's not clear that all forms of debt 
bondage were ever entirely eliminated even in cities like Athens and 
Rome. In cities that were not successful military powers, without any 
source of income to set up welfare policies, debt crises continued to 
flare up every century or so — and they often became far more acute 
than they ever had in the Middle East, because there was no mecha- 
nism, short of outright revolution, to declare a Mesopotamian-style 
clean slate. Large populations, even in the Greek world, did, in fact, 
sink to the rank of serfs and clients. 27 

Athenians, as we've seen, seemed to assume that a gentleman nor- 
mally lived a step or two ahead of his creditors. Roman politicians 
were little different. Of course much of the debt was money that mem- 
bers of the senatorial class owed to each other: in a way, it's just the 
usual communism of the rich, extending credit to one another on easy 
terms that they would never think to offer others. Still, under the late 
Republic, history records many intrigues and conspiracies hatched by 
desperate debtors, often aristocrats driven by relentless creditors to 
make common cause with the poor. 28 If we hear less about this sort of 
thing happening under the emperors, it's probably because there were 
fewer opportunities for protest; what evidence we have suggests that 
if anything, the problem got much worse. 29 Around 100 ad, Plutarch 
wrote about his own country as if it were under foreign invasion: 

And as King Darius sent to the city of Athens his lieutenants 
Datis and Artaphernes with chains and cords, to bind the pris- 
oners they should take; so these usurers, bringing into Greece 
boxes full of schedules, bills, and obligatory contracts, as so 
many irons and fetters for the shackling of poor criminals . . . 

For at the very delivery of their money, they immediately 
ask it back, taking it up at the same moment they lay it down; 
and they let out that again to interest which they take for the 
use of what they have before lent. 



So that they laugh at those natural philosophers who hold 
that nothing can be made of nothing and of that which has no 
existence; but with them usury is made and engendered of that 
which neither is nor ever was. 30 

The works of the early Christian fathers likewise resound with 
endless descriptions of the misery and desperation of those caught in 
rich lenders' webs. In the end, through this means, that small win- 
dow of freedom that had been created by the plebs was completely 
undone, and the free peasantry largely eliminated. By the end of the 
empire, most people in the countryside who weren't outright slaves 
had become, effectively, debt peons to some rich landlord; a situation 
in the end legally formalized by imperial decrees binding peasants to 
the land. 31 Without a free peasantry to form the basis for the army, 
the state was forced to rely more and more on arming and employing 
Germanic barbarians from across the imperial frontiers — with results 
I need hardly relate. 


In most ways, India, could not be more different as a civilization than 
the ancient Mediterranean — but to a remarkable degree, the same basic 
pattern repeats itself there as well. 

The Bronze Age civilization of the Indus Valley collapsed sometime 
around 1600 BC; it would be about a thousand years before India saw 
the emergence of another urban civilization. When it did, that civili- 
zation was centered on the fertile plains that surrounded the Ganges 
farther east. Here too we observe, at first, a checkerboard of different 
sorts of government, from the famous "Ksatriya republics" with a pop- 
ulace in arms and urban democratic assemblies, to elective monarchies, 
to centralized empires like Kosala and Magadha. 32 Both Gautama (the 
future Buddha), and Mahavira (the founder of Jainism) were born in 
one of the republics, though both ultimately found themselves teaching 
within the great empires, whose rulers often became patrons of wan- 
dering ascetics and philosophers. 

Both kingdoms and republics produced their own silver and cop- 
per coinage, but in some ways the republics were more traditional, 
since the self-governing "populace in arms" consisted of the traditional 
Ksatriya or warrior caste, who typically held their lands in common 
and had them worked by serfs or slaves. 33 The kingdoms, on the other 
hand, were founded on a fundamentally new institution: a trained, 



professional army, open to young men of a wide variety of back- 
grounds, their equipment supplied by central authorities (soldiers were 
obliged to check their arms and armor when they entered cities), and 
provided with generous salaries. 

Whatever their origins, here too, coins and markets sprung up 
above all to feed the machinery of war. Magadha, which ultimately 
came out on top, did so largely because it controlled most of the 
mines. Kautilya's Arthasastra, a political treatise written by one of the 
chief ministers for the Mauryan dynasty that succeeded it (321-185 bc), 
stated the matter precisely: "The treasury is based upon mining, the 
army upon the treasury; he who has army and treasury may conquer 
the whole wide earth.'" 4 The government drew its personnel first of 
all from a landed class, which provided trained administrators, but 
even more, full-time soldiers: the salaries of each rank of soldier and 
administrator were carefully stipulated. These armies could be huge. 
Greek sources report that Magadha could put to the field a force of 
200,000 infantry, 20,000 horses, and about 4,000 elephants — and that 
Alexander's men mutinied rather than have to face them. Whether on 
campaign or in garrison, they were inevitably accompanied by a range 
of different sorts of camp followers — petty traders, prostitutes, and 
hired servants — which, with the soldiers, seems to have been the very 
medium through which a cash economy had originally taken form. 35 
By Kautilya's time, a few hundred years later, the state was inserting 
itself into every aspect of the process: Kautilya suggests paying sol- 
diers apparently generous wages, then secretly replacing hawkers with 
government agents who could charge them twice the normal rates for 
supplies, as well as organizing prostitutes under a ministry in which 
they could be trained as spies, so as to make detailed reports on their 
clients' loyalties. 

Thus was the market economy, born of war, gradually taken over 
by the government. Rather than stifle the spread of currency, the pro- 
cess seems to have doubled and even tripled it: the military logic was 
extended to the entire economy, the government systematically setting 
up its granaries, workshops, trading houses, warehouses, and jails, 
staffed by salaried officials, and all selling products on the market so as 
to collect the pieces of silver paid off to soldiers and officials and put 
them back into the royal treasuries again.' 6 The result was a moneta- 
rization of daily life unlike anything India was to see for another two 
thousand years.' 7 

Something similar seems to have happened with slavery, which was 
quite commonplace at the time of the rise of the great armies — again, 
unlike almost any other point in Indian history — but was gradually 



brought under government control. 38 By Kautilya's time, most war cap- 
tives were not sold in marketplaces but relocated to government vil- 
lages on newly reclaimed land. They were not allowed to leave, and 
these government villages were, at least according to the regulations, 
remarkably dreary places: veritable work camps, with all forms of 
festive entertainment officially prohibited. Slave hirelings were mostly 
convicts, rented by the state during their terms. 

With their armies, spies, and administration controlling everything, 
the new Indian kings evinced little interest in the old priestly caste 
and its Vedic ritual, though many kept up a lively interest in the new 
philosophical and religious ideas that seem to have been cropping up 
everywhere at the time. As time went on, however, the war machine 
began to sputter. It's not clear exactly why this happened. By the 
time of emperor Asoka (273-232 be), the Maury an dynasty controlled 
almost all of present-day India and Pakistan, but the Indian version 
of the military-coinage-slavery complex was showing definite signs of 
strain. Perhaps the clearest sign was the debasement of the coinage, 
which over the course of two centuries or so had gone from almost 
pure silver to about fifty percent copper. 39 

Asoka, famously, began his reign in conquest: in 265 be, destroying 
the Kalingas, one of the last remaining Indian republics, in a war in 
which hundreds of thousands of human beings were, according to his 
own account, killed or carried off into slavery. Asoka later claimed to 
have been so disturbed and haunted by the carnage that he renounced 
war altogether, embraced Buddhism, and declared that from that time 
on, his kingdom would be governed by principles of ahimsa, or non- 
violence. "Here in my kingdom," he declared in an edict inscribed on 
one of the great granite pillars in his capital of Patna, which so dazzled 
the Greek ambassador Megasthenes, "no living being must be killed or 
sacrificed." 40 Such a statement obviously can't be taken literally: Asoka 
might have replaced sacrificial ritual with vegetarian feasts, but he 
didn't abolish the army, abandon capital punishment, or even outlaw 
slavery. But his rule marked a revolutionary shift in ethos. Aggressive 
war was abandoned, and much of the army does seems to have been 
demobilized, along with the network of spies and state bureaucrats, 
with the new, proliferating mendicant orders (Buddhists, Jains, and 
also world-renouncing Hindus) given official state support to preach to 
the villages on questions of social morality. Asoka and his successors 
diverted substantial resources to these religious orders, with the result 
that, over the next centuries, thousands of stupas and monasteries were 
built across the subcontinent. 41 



Asoka's reforms are useful to contemplate here because they help 
reveal just how mistaken some of our basic assumptions are: par- 
ticularly, that money equals coins, and that more coins in circulation 
means more commerce and a greater role for private merchants. In 
reality, the Magadha state promoted markets but had been suspicious 
of private merchants, seeing them largely as competitors. 42 Merchants 
had been among the earliest and most ardent supporters of the new 
religions (Jains, owing to their rigorous enforcement of rules against 
harm to any living creature, were obliged to become, effectively, a 
mercantile caste). Mercantile interests fully supported Asoka's reforms. 
Yet the result was not an increase in the use of cash in everyday affairs 
but exactly the opposite. 

Early Buddhist economic attitudes have long been considered a 
bit mysterious. On the one hand, monks could not own property as 
individuals; they were expected to live an austere communistic life 
with little more than a robe and begging bowl as personal possessions, 
and they were strictly forbidden to so much as touch anything made 
of gold or silver. On the other hand, however suspicious of precious 
metals, Buddhism had always had a liberal attitude toward credit ar- 
rangements. It is one of the few of the great world religions that has 
never formally condemned usury. 43 Taken in the context of the times, 
however, there's nothing particularly mysterious about any of this. It 
makes perfect sense for a religious movement that rejected violence 
and militarism, but that was in no way opposed to commerce. 44 As we 
shall see, while Asoka's own empire was not long to endure, soon to 
be replaced by a succession of ever weaker and mostly smaller states, 
Buddhism took root. The decline of the great armies eventually led to 
the near-disappearance of coinage, but also to a veritable efflorescence 
of increasingly sophisticated forms of credit. 


Until about 475 BC, northern China was still nominally an empire, but 
the emperors had devolved into figureheads and a series of de facto 
kingdoms had emerged. The period from 475 to 221 bc is referred as 
the "Warring States period"; at that point, even the pretense of unity 
was cast aside. Ultimately, the country was reunited by the state of 
Qin, who established a dynasty that was then immediately overthrown 
by a series of massive popular insurrections, ushering in the Han dy- 
nasty (206 BC-220 ad), founded by a previously obscure rural constable 



and peasant leader named Liu Bao, who was the first Chinese leader 
to adopt the Confucian ideology, exam system, and pattern of civil 
administration that were to continue for almost two thousand years. 

Still, the golden age of Chinese philosophy was the period of chaos 
that preceded unification, and this followed the typical Axial Age pat- 
tern: the same fractured political landscape, the same rise of trained, 
professional armies and the creation of coined money largely in order 
to pay them. 45 We also see the same government policies designed to 
encourage the development of markets, chattel slavery on a scale not 
seen before or since in Chinese history, the appearance of itinerant 
philosophers and religious visionaries, battling intellectual schools, and 
eventually, attempts by political leaders to transform the new philoso- 
phies into religions of state. 46 

There were also significant differences, starting with the currency 
system. China never minted gold or silver coins. Merchants used pre- 
cious metals in the form of bullion, but the coins in actual circulation 
were basically small change: cast bronze disks, usually with a hole in 
the middle so that they could be strung together. Such strings of "cash" 
were produced in extraordinary numbers, and very large amounts had 
to be assembled for large-scale transactions: when wealthy men wished 
to make donations to temples, for instance, they had to use oxcarts 
to carry the money. The most plausible explanation is that, especially 
after unification, Chinese armies were enormous — some Warring States 
armies numbered up to a million — but not nearly as professional or 
well paid as those of kingdoms farther west, and from Qin and Han 
times on, rulers were careful to ensure that this remained the case, to 
make sure the army never became an independent power base. 47 

There was also a notable difference in that the new religious and 
philosophical movements in China were from their very beginnings also 
social movements. Elsewhere, they only gradually became so. In ancient 
Greece, philosophy began with cosmological speculation; philosophers 
were more likely to be individual sages, perhaps surrounded by a few 
ardent disciples, as founders of movements. 48 Under the Roman empire, 
schools of philosophy like the Stoics, Epicureans, Neo-Platonists did 
become movements of a sort: at least in the sense that they had thou- 
sands of educated adherents, who "practiced" philosophy not only by 
reading, writing, and debating, but even more by meditation, diet, and 
exercise. Still, philosophical movements were basically confined to the 
civic elite; it was only with the rise of Christianity and other religious 
movements that philosophy moved beyond it. 49 One can observe a 
similar evolution in India, from individual Brahman world-renouncers, 
forest sages, and wandering mendicants with theories about the nature 



of the soul or the composition of the material universe; to philosoph- 
ical movements of the Buddhists, Jains, AjTvika, and others mostly 
long forgotten; to, finally, mass religious movements with thousands of 
monks, shrines, schools, and networks of lay supporters. 

In China, while many of the founders of the "hundred schools" of 
philosophy that blossomed under the Warring States were wandering 
sages who spent their days moving from city to city trying to catch 
the ears of princes, others were leaders of social movements from the 
very start. Some of these movements didn't even have leaders, like the 
School of the Tillers, an anarchist movement of peasant intellectuals 
who set out to create egalitarian communities in the cracks and fissures 
between states. 50 The Mohists, egalitarian rationalists whose social 
base seems to have been urban artisans, not only were philosophically 
opposed to war and militarism, but organized battalions of military en- 
gineers who would actively discourage conflicts by volunteering to fight 
in any war against the side of the aggressor. Even the Confucians, for 
all the importance they attached to courtly ritual, were in their early 
days mainly known for their efforts in popular education. 51 

Materialism I: 
The Pursuit of Profit 

What is one to make of all this? The popular education campaigns of 
the period perhaps provide a clue. The Axial Age was the first time 
in human history when familiarity with the written word was no lon- 
ger limited to priests, administrators, and merchants, but had become 
necessary to full participation in civic life. In Athens, it was taken for 
granted that only a country bumpkin would be entirely illiterate. 

Without mass literacy, neither the emergence of mass intellectual 
movements, nor the spread of Axial Age ideas would have been pos- 
sible. By the end of the period, these ideas had produced a world where 
even the leaders of barbarian armies descending on the Roman empire 
felt obliged to take a position on the question of the Mystery of the 
Trinity, and where Chinese monks could spend time debating the rela- 
tive merits of the eighteen schools of Classical Indian Buddhism. 

No doubt the growth of markets played a role too, not only help- 
ing to free people from the proverbial shackles of status or community, 
but encouraging a certain habit of rational calculation, of measuring 
inputs and outputs, means and ends, all of which must inevitably have 
found some echoes in the new spirit of rational inquiry that begins to 



appear in all the same times and places. Even the word "rational" is 
telling: it derives, of course, from "ratio" — how many of X go into 
Y — a sort of mathematical calculation previously used mainly by ar- 
chitects and engineers, but which, with the rise of markets, everyone 
who didn't want to get cheated at the marketplace had to learn how 
to do. Still, we must be careful here. After all, money in itself was 
nothing new. Sumerian farmers and tradesmen were already perfectly 
capable of making such calculations in 3500 bc; but none, as far as we 
know, were so impressed that they concluded, like Pythagoras, that 
mathematical ratios were the key to understanding the nature of the 
universe and the movement of celestial bodies, and that all things were 
ultimately composed of numbers — and they certainly hadn't formed 
secret societies based on sharing this understanding, debating and purg- 
ing and excommunicating one another. 52 

To understand what had changed, we have to look, again, at the 
particular kind of markets that were emerging at the beginning of the 
Axial Age: impersonal markets, born of war, in which it was possible 
to treat even neighbors as if they were strangers. 

Within human economies, motives are assumed to be complex. 
When a lord gives a gift to a retainer, there is no reason to doubt that 
it is inspired by a genuine desire to benefit that retainer, even if it is 
also a strategic move designed to ensure loyalty, and an act of magnifi- 
cence meant to remind everyone else that he is great and the retainer 
small. There is no sense of contradiction here. Similarly, gifts between 
equals are usually fraught with many layers of love, envy, pride, spite, 
communal solidarity, or any of a dozen other things. Speculating on 
such matters is a major form of daily entertainment. What's missing, 
though, is any sense that the most selfish ("self-interested") motive is 
necessarily the real one: those speculating on hidden motives are just 
as likely to assume that someone is secretly trying to help a friend or 
harm an enemy as to acquire some advantage for him- or herself. 53 
Neither is any of this likely to have changed much in the rise of early 
credit markets, where the value of an IOU was as much dependent on 
assessments of its issuer's character as on his disposable income, and 
motives of love, envy, pride, etc. could never be completely set aside. 

Cash transactions between strangers were different, and all the 
more so when trading is set against a background of war and emerges 
from disposing of loot and provisioning soldiers; when one often had 
best not ask where the objects traded came from, and where no one 
is much interested in forming ongoing personal relationships anyway. 
Here, transactions really do become simply a figuring-out of how many 
of X will go for how many of Y, of calculating proportions, estimating 



quality, and trying to get the best deal for oneself. The result, during 
the Axial Age, was a new way of thinking about human motivation, a 
radical simplification of motives that made it possible to begin speak- 
ing of concepts like "profit" and "advantage" — and imagining that this 
is what people are really pursuing, in every aspect of existence, as if 
the violence of war or the impersonality of the marketplace has simply 
allowed them to drop the pretense that they ever cared about anything 
else. It was this, in turn, that allowed human life to seem like it could 
be reduced to a matter of means-to-end calculation, and hence some- 
thing that could be examined using the same means that one used to 
study the attraction and repulsion of celestial bodies. 54 If the underlying 
assumption very much resembles those of contemporary economists, 
it's no coincidence — but with the difference that, in an age when mon- 
ey, markets, states, and military affairs were all intrinsically connected, 
money was needed to pay armies to capture slaves to mine gold to 
produce money; when "cutthroat competition" often did involve the 
literal cutting of throats, it never occurred to anyone to imagine that 
selfish ends could be pursued by peaceful means. Certainly, this picture 
of humanity does begin to appear, with startling consistency, across 
Eurasia, wherever we also see coinage and philosophy appear. 

China provides an unusually transparent case in point. Already 
in Confucius's time, Chinese thinkers were speaking of the pursuit of 
profit as the driving force in human life. The actual term used was //', 
a word first used to refer to the increase of grain one harvests from 
a field over and above what one originally planted (the pictogram 
represents a sheaf of wheat next to a knife). 55 From there it came to 
mean commercial profit, and thence, a general term for "benefit" or 
"payback." The following story, which purports to tell the reaction of 
a merchant's son named Lii Buwei on learning that an exiled prince 
was living nearby, illustrates the progression nicely: 

On returning home, he said to his father, "What is the profit on 
investment that one can expect from plowing fields?" 

"Ten times the investment," replied his father. 

"And the return on investment in pearls and jades is how 

"A hundredfold." 

"And the return on investment from establishing a ruler and 
securing the state would be how much?" 
"It would be incalculable." 56 



Lii adopted the prince's cause and eventually contrived to make 
him King of Qin. He went on to became first minister for the king's 
son, Qin Shi Huang, helping him defeat the other Warring States to 
became the first Emperor of China. We still have a compendium of 
political wisdom that Lii commissioned for the new emperor, which 
contains such military advice as the following: 

As a general principle, when an enemy's army comes, it seeks 
some profit. Now if they come and find the prospect of death 
instead, they will consider running away the most profitable 
thing to do. When all one's enemies consider running to be the 
most profitable thing to do, no blades will cross. 

This is the most essential point in military matters. 57 

In such a world, heroic considerations of honor and glory, vows to 
gods or desire for vengeance, were at best weaknesses to be manipu- 
lated. In the numerous manuals on statecraft produced at the time, 
everything was cast as a matter of recognizing interest and advantage, 
calculating how to balance that which will profit the ruler against that 
which will profit the people, determining when the ruler's interests are 
the same as the people's and when they contradict. 58 Technical terms 
drawn from politics, economics, and military strategy ("return on in- 
vestment," "strategic advantage") blended and overlapped. 

The predominant school of political thought under the Warring 
States was that of the Legalists, who insisted that in matters of state- 
craft, a ruler's interests were the only consideration, even if rulers 
would be unwise to admit this. Still, the people could be easily ma- 
nipulated, since they had the same motivations: the people's pursuit of 
profit, wrote Lord Shang, is utterly predictable, "just like the tendency 
of water to flow downhill." 59 Shang was harsher than most of his fel- 
low Legalists in that he believed that widespread prosperity would 
ultimately harm the ruler's ability to mobilize his people for war, and 
therefore that terror was the most efficient instrument of governance, 
but even he insisted that this regime be clothed as a regime of law 
and justice. 

Wherever the military-coinage-slavery complex began to take hold, 
we find political theorists propounding similar ideas. Kautilya was no 
different: the title of his book, the Arthasastra, is usually translated as 
"manual of statecraft," since it consists of advice to rulers, but its more 
literal translation is "the science of material gain." 60 Like the Legalists, 
Kautilya emphasized the need to create a pretext that governance was a 
matter of morality and justice, but in addressing the rulers themselves, 



he insisted that "war and peace are considered solely from the point of 
view of profit" — of amassing wealth to create a more effective army, 
of using the army to dominate markets and control resources to amass 
more wealth, and so on. 61 In Greece we've already met Thrasyma- 
chos. True, Greece was slightly different. Greek city-states did not have 
kings, and the collapse of private interests and affairs of state was in 
principle universally denounced as tyranny. Still, in practice, what this 
meant was that city-states, and even political factions, ended up acting 
in precisely the same coldly calculating way as Indian or Chinese sov- 
ereigns. Anyone who has ever read Thucydides' Melian dialogue — in 
which Athenian generals present the population of a previously friendly 
city with elegantly reasoned arguments for why the Athenians have 
determined that it is to the advantage of their empire to threaten them 
with collective massacre if they are not willing to become tribute- 
paying subjects, and why it is equally in the interests of the Melians to 
submit — is aware of the results. 62 

Another striking feature of this literature is its resolute material- 
ism. Goddesses and gods, magic and oracles, sacrificial ritual, ancestral 
cults, even caste and ritual status systems all either disappear or are 
sidelined, no longer treated as ends in themselves but as yet mere tools 
to be used for the pursuit of material gain. 

That intellectuals willing to produce such theories should win the 
ears of princes is hardly surprising. Neither is it particularly surpris- 
ing that other intellectuals should have been so offended by this sort 
of cynicism that they began to make common cause with the popular 
movements that inevitably began to form against those princes. But 
as is so often the case, oppositional intellectuals were faced with two 
choices: either adopt the reigning terms of debate, or try to come up 
with a diametrical inversion. Mo Di, the founder of Mohism, took the 
first approach. He turned the concept of li, profit, into something more 
like "social utility," and then he attempted to demonstrate that war 
itself is, by definition, an unprofitable activity. For example, he wrote, 
campaigns can only be fought in spring and autumn, and each had 
equally deleterious effects: 

If in the spring then the people miss their sowing and planting, 
if in the autumn, they miss their reaping and harvesting. Even if 
they miss only one season, then the number of people who will 
die of cold and hunger is incalculable. Now let us calculate the 
army's equipment, the arrows, standards, tents, armor, shields, 
and sword hilts; the number of these which will break and per- 
ish and not come back ... So also with oxen and horses . . , 63 



His conclusion: if one could add up the total costs of aggression in 
human lives, animal lives, and material damage, one would be forced 
to the conclusion that they never outweighed the benefits — even for the 
victor. In fact, Mo Di took this sort of logic so far that he ended up ar- 
guing that the only way to optimize the overall profit of humanity was 
to abandon the pursuit of private profit entirely and adopt a principle 
of what he called "universal love" — essentially arguing that if one takes 
the principle of market exchange to its logical conclusion, it can only 
lead to a kind of communism. 

The Confucians took the opposite approach, rejecting the initial 
premise. A good example is most of the opening of Mencius' much- 
remembered conversation with King Hui: 

"Venerable Sir," the King greeted him, "since you have not 
counted a thousand miles too far to come here, may I suppose 
that you also have something with which you may profit my 

Mencius replied: 

"Why must Your Majesty necessarily use this word 'profit'? 
What I have are only these two topics: benevolence and righ- 
teousness, and nothing else." 64 

Still, the end-point was roughly the same. The Confucian ideal of 
ren, of humane benevolence, was basically just a more complete inver- 
sion of profit-seeking calculation than Mo Di's universal love; the main 
difference was that the Confucians added a certain aversion to calcula- 
tion itself, preferring what might almost be called an art of decency. 
Taoists were later to take this even further with their embrace of intu- 
ition and spontaneity. All were so many attempts to provide a mirror 
image of market logic. Still, a mirror image is, ultimately, just that: the 
same thing, only backwards. Before long we end up with an endless 
maze of paired opposites — egoism versus altruism, profit versus char- 
ity, materialism versus idealism, calculation versus spontaneity — none 
of which could ever have been imagined except by someone starting 
out from pure, calculating, self-interested market transactions. 65 



Materialism II: 

As in the near presence of death, de- 
spise poor flesh, this refuse of blood and 
bones, this web and tissue of nerves and 
veins and arteries. 

— Marcus Aurelius, Meditations 2.2 

Taking pity on the hungry wolf, Wen- 
shuang announced, "I do not covet this 
filthy bag of meat. I give it over to you 
that I may quickly acquire a body of 
more enduring strength. This donation 
will help benefit us both." 

— Discourse on the Pure Land 21.12 

As I've already observed, China was unusual because philosophy there 
began with debates about ethics and only later turned to speculations 
about the nature of the cosmos. In both Greece and India, cosmological 
speculation came first. In each, too, questions about the nature of the 
physical universe quickly give way to speculation about mind, truth, 
consciousness, meaning, language, illusion, world-spirits, cosmic intel- 
ligence, and the fate of the human soul. 

This particular maze of mirrors is so complex and dazzling that 
it's extraordinarily difficult to discern the starting point — that is, what, 
precisely, is being reflected back and forth. Here anthropology can be 
helpful, as anthropologists have the unique advantage of being able to 
observe how human beings who have not previously been part of these 
conversations react when first exposed to Axial Age concepts. Every 
now and then too, we are presented with moments of exceptional 
clarity: ones that reveal the essence of our own thought to be almost 
exactly the opposite of what we thought it to be. 

Maurice Leenhardt, a Catholic missionary who had spent many 
long years teaching the Gospel in New Caledonia, experienced such 
a moment in the 1920s, when he asked one of his students, an aged 
sculptor named Boesoou, how he felt about having been introduced to 
spiritual ideas: 



Once, waiting to assess the mental progress of the Canaques I 
had taught for many years, I risked the following suggestion: 
"In short, we introduced the notion of the spirit to your way 
of thinking?" 

He objected, "Spirit? Bah! You didn't bring us the spirit. 
We already knew the spirit existed. We have always acted in 
accord with the spirit. What you've brought us is the body." 66 

The notion that humans had souls appeared to Boesoou to be self- 
evident. The notion that there was such a thing as the body, apart from 
the soul, a mere material collection of nerves and tissues — let alone 
that the body is the prison of the soul; that the mortification of the 
body could be a means to the glorification or liberation of the soul — all 
this, it turns out, struck him as utterly new and exotic. 

Axial Age spirituality, then, is built on a bedrock of materialism. 
This is its secret; one might almost say, the thing that has become 
invisible to us. 67 But if one looks at the very beginnings of philosophi- 
cal inquiry in Greece and India — the point when there was as yet no 
difference between what we'd now call "philosophy" and what we'd 
now call "science" — this is exactly what one finds. "Theory," if we can 
call it that, begins with the questions: "What substance is the world 
made of?" "What is the underlying material behind the physical forms 
of objects in the world?" "Is everything made up of varying combina- 
tions of certain basic elements (earth, air, water, fire, stone, motion, 
mind, number . . .), or are these basic elements just the forms taken by 
some even more elementary substance (for instance, as Nyaya and later 
Democritus proposed, atomic particles . . .)" 68 In just about every case, 
some notion of God, Mind, Spirit, some active organizing principle 
that gave form to and was not itself substance, emerged as well. But 
this was the kind of spirit that, like Leenhardt's God, only emerges in 
relation to inert matter. 69 

To connect this impulse, too, with the invention of coinage might 
seem like pushing things a bit far but, at least for the Classical world, 
there is an emerging scholarly literature — first set off by Harvard liter- 
ary theorist Marc Shell, and more recently set forth by British classicist 
Richard Seaford in a book called Money and the Early Greek Mind — 
that aims to do exactly that. 70 

In fact, some of the historical connections are so uncannily close 
that they are very hard to explain any other way. Let me give an ex- 
ample. After the first coins were minted around 600 BC in the kingdom 
of Lydia, the practice quickly spread to Ionia, the Greek cities of the 
adjacent coast. The greatest of these was the great walled metropolis of 



Miletus, which also appears to have been the first Greek city to strike 
its own coins. It was Ionia, too, that provided the bulk of the Greek 
mercenaries active in the Mediterranean at the time, with Miletus their 
effective headquarters. Miletus was also the commercial center of the 
region, and, perhaps, the first city in the world where everyday mar- 
ket transactions came to be carried out primarily in coins instead of 
credit. 71 Greek philosophy, in turn, begins with three men: Thales, of 
Miletus (c. 624 bc-c. 546 bc), Anaximander, of Miletus (c. 610 bc-c. 
546 bc), and Anaximenes, of Miletus (c. 585 bc-c. 52.5 bc) — in other 
words, men who were living in that city at exactly the time that coin- 
age was first introduced. 72 All three are remembered chiefly for their 
speculations on the nature of the physical substance from which the 
world ultimately sprang. Thales proposed water, Anaximenes, air. 
Anaximander made up a new term, apeiron, "the unlimited," a kind of 
pure abstract substance that could not itself be perceived but was the 
material basis of everything that could be. In each case, the assumption 
was that this primal substance, by being heated, cooled, combined, di- 
vided, compressed, extended, or set in motion, gave rise to the endless 
particular stuffs and substances that humans actually encounter in the 
world, from which physical objects are composed — and was also that 
into which all those forms would eventually dissolve. 

It was something that could turn into everything. As Seaford em- 
phasizes, so was money. Gold, shaped into coins, is a material sub- 
stance that is also an abstraction. It is both a lump of metal and some- 
thing more than a lump of metal — it's a drachma or an obol, a unit of 
currency which (at least if collected in sufficient quantity, taken to the 
right place at the right time, turned over to the right person) could be 
exchanged for absolutely any other object whatsoever. 73 

For Seaford, what was genuinely new about coins was their double- 
sidedness: the fact that they were both valuable pieces of metal and, at 
the same time, something more. At least within the communities that 
created them, ancient coins were always worth more than the gold, 
silver, or copper of which they were composed. Seaford refers to this 
extra value by the inelegant term "fiduciarity," which comes from the 
term for public trust, the confidence a community places in its curren- 
cy. 74 True, at the height of Classical Greece, when there were hundreds 
of city-states producing different currencies according to a number of 
different systems of weights and denominations, merchants often did 
carry scales and treat coins — particularly foreign coins — like so many 
chunks of silver, just as Indian merchants seem to have treated Roman 
coins; but within a city, that city's currency had a special status, since 
it was always acceptable at face value when used to pay taxes, public 



fees, or legal penalties. This is, incidentally, why ancient governments 
were so often able to introduce base metal into their coins without 
leading to immediate inflation; a debased coin might have lost value 
when traded overseas, but at home, it was still worth just as much 
when purchasing a license, or entering the public theater. 75 This is also 
why, during pubic emergencies, Greek city-states would occasionally 
strike coins made entirely of bronze or tin, which everyone would 
agree, while the emergency lasted, to treat as if they were really made 
of silver. 76 

This is the key to Seaford's argument about materialism and Greek 
philosophy. A coin was a piece of metal, but by giving it a particular 
shape, stamped with words and images, the civic community agreed 
to make it something more. But this power was not unlimited. Bronze 
coins could not be used forever; if one debased the coinage, inflation 
would eventually set in. It was as if there was a tension there, between 
the will of the community and the physical nature of the object itself. 
Greek thinkers were suddenly confronted with a profoundly new type 
of object, one of extraordinary importance — as evidenced by the fact 
that so many men were willing to risk their lives to get their hands on 
it — but whose nature was a profound enigma. 

Consider this word, "materialism." What does it mean to adopt a 
"materialist" philosophy? What is "material," anyway? Normally, we 
speak of "materials" when we refer to objects that we wish to make 
into something else. A tree is a living thing. It only becomes "wood" 
when we begin to think about all the other things you could carve out 
of it. And of course you can carve a piece of wood into almost any- 
thing. The same is true of clay, or glass, or metal. They're solid and 
real and tangible, but also abstractions, because they have the potential 
to turn into almost anything else — or, not precisely that; one can't turn 
a piece of wood into a lion or an owl, but one can turn it into an image 
of a lion or an owl — it can take on almost any conceivable form. So 
already in any materialist philosophy, we are dealing with an opposi- 
tion between form and content, substance and shape; a clash between 
the idea, sign, emblem, or model in the creator's mind, and the physical 
qualities of the materials on which it is to be stamped, built, or im- 
posed, from which it will be brought into reality. 77 With coins this rises 
to an even more abstract level because that emblem can no longer be 
conceived as the model in one person's head, but is rather the mark of 
a collective agreement. The images stamped on Greek coins (Miletus' 
lion, Athens' owl) were typically the emblems of the city's god, but 
they were also a kind of collective promise, by which citizens assured 
one another that not only would the coin be acceptable in payment of 



public debts, but in a larger sense, that everyone would accept them, 
for any debts, and thus, that they could be use to acquire anything 
anyone wanted. 

The problem is that this collective power is not unlimited. It only 
really applies within the city. The farther you go outside, into places 
dominated by violence, slavery, and war — the sort of place where even 
philosophers taking a cruise might end up on the auction block — the 
more it turns into a mere lump of precious metal. 78 

The war between Spirit and Flesh, then, between the noble Idea 
and ugly Reality, the rational intellect versus stubborn corporeal drives 
and desires that resist it, even the idea that peace and community are 
not things that emerge spontaneously but that need to be stamped onto 
our baser material natures like a divine insignia stamped into base 
metal — all those ideas that came to haunt the religious and philosophi- 
cal traditions of the Axial Age, and that have continued to surprise 
people like Boesoou ever since — can already be seen as inscribed in the 
nature of this new form of money. 

It would be foolish to argue that all Axial Age philosophy was sim- 
ply a meditation on the nature of coinage, but I think Seaford is right 
to argue that this is a critical starting place: one of the reasons that the 
pre-Socratic philosophers began to frame their questions in the peculiar 
way they did, asking (for instance): What are Ideas? Are they merely 
collective conventions? Do they exist, as Plato insisted, in some divine 
domain beyond material existence? Or do they exist in our minds? Or 
do our minds themselves ultimately partake of that divine immate- 
rial domain? And if they do, what does this say about our relation to 
our bodies? 

In India and China, the debate took different forms, but materialism 
was always the starting point. We only know the ideas of most truly 
materialist thinkers from the works of their intellectual enemies: as is 
the case with the Indian king Payasi, who enjoyed debating Buddhist 
and Jain philosophers, taking the position that the soul does not exist, 
that human bodies are nothing but particular configurations of air, wa- 
ter, earth, and fire, their consciousness the result of the elements' mu- 
tual interaction, and that when we die, the elements simply dissolve. 79 
Clearly, though, such ideas were commonplace. Even the Axial Age 
religions are often startlingly lacking in the plethora of supernatural 
forces seen before and after: as witnessed by continued debates over 
whether Buddhism even is a religion, since it rejects any notion of a 



supreme being, or whether Confucius' admonitions that one should 
continue to venerate one's ancestors was merely a way of encouraging 
filial piety, or based on a belief that dead ancestors did, in some sense, 
continue to exist. The fact that we have to ask says everything. Yet at 
the same time, what endures, above all, from that age — in institutional 
terms — are what we call the "world religions." 

What we see then is a strange kind of back-and-forth, attack and 
riposte, whereby the market, the state, war, and religion all continually 
separate and merge with one another. Let me summarize it as briefly 
as I can: 

1) Markets appear to have first emerged, in the Near East at least, as 
a side effect of government administrative systems. Over time, how- 
ever, the logic of the market became entangled in military affairs, 
where it became almost indistinguishable from the mercenary logic 
of Axial Age warfare, and then, finally, that logic came to conquer 
government itself; to define its very purpose. 

2) As a result: everywhere we see the military-coinage-slavery complex 
emerge, we also see the birth of materialist philosophies. They are 
materialist, in fact, in both senses of the term: in that they envision 
a world made up of material forces, rather than divine powers, and 
in that they imagine the ultimate end of human existence to be the 
accumulation of material wealth, with ideals like morality and jus- 
tice being reframed as tools designed to satisfy the masses. 

3) Everywhere, too, we find philosophers who react to this by explor- 
ing ideas of humanity and the soul, attempting to find a new foun- 
dation for ethics and morality. 

4) Everywhere some of these philosophers made common cause with 
social movements that inevitably formed in the face of these new 
and extraordinarily violent and cynical elites. The result was some- 
thing new to human history: popular movements that were also 
intellectual movements, due to the assumption that those opposing 
existing power arrangements did so in the name of some kind of 
theory about the nature of reality. 

5) Everywhere, these movements were first and foremost peace move- 
ments, in that they rejected the new conception of violence, and 
especially aggressive war, as the foundation of politics. 

6) Everywhere too, there seems to have been an initial impulse to use 
the new intellectual tools provided by impersonal markets to come 
up with a new basis for morality, and everywhere, it foundered. 
Mohism, with its notion of social profit, flourished briefly and 
then collapsed. It was replaced by Confucianism, which rejected 
such ideas outright. We have already seen that reimagining moral 



responsibility in terms of debt — an impulse that cropped up in both 
Greece and India — while almost inevitable given the new economic 
circumstances, seems to prove uniformly unsatisfying. 80 The strong- 
er impulse is to imagine another world where debt — and with it, 
all other worldly connections — can be entirely annihilated, where 
social attachments are seen as forms of bondage; just as the body is 
a prison. 

7) Rulers' attitudes changed over time. At first, most appear to have 
affected an attitude of bemused tolerance toward the new philo- 
sophical and religious movements while privately embracing some 
version of cynical realpolitik, But as warring cities and principalities 
were replaced by great empires, and especially, as those empires 
began to reach the limits of their expansion, sending the military- 
coinage-slavery complex into crisis, all this suddenly changed. In 
India, Asoka tried to re-found his kingdom on Buddhism; in Rome, 
Constantine turned to the Christians; in China, the Han emperor 
Wu-Ti (157-87 BC), faced with a similar military and financial crisis, 
adopted Confucianism as the philosophy of state. Of the three, only 
Wu Ti was ultimately successful: the Chinese empire endured, in one 
form or another, for two thousand years, almost always with Con- 
fucianism as its official ideology. In Constantine's case the Western 
empire fell apart, but the Roman church endured. Asoka's project 
could be said to be the least successful. Not only did his empire fall 
apart, replaced by an endless series of weaker, usually fragmentary 
kingdoms, but Buddhism itself was largely driven out of his one-time 
territories, though it did establish itself much more firmly in China, 
Nepal, Tibet, Sri Lanka, Korea, Japan, and much of Southeast Asia. 

8) The ultimate effect was a kind of ideal division of spheres of human 
activity that endures to this day: on the one hand the market, on the 
other, religion. To put the matter crudely: if one relegates a certain 
social space simply to the selfish acquisition of material things, it 
is almost inevitable that soon someone else will come to set aside 
another domain in which to preach that, from the perspective of ul- 
timate values, material things are unimportant; that selfishness — or 
even the self — are illusory, and that to give is better than to receive. 
If nothing else, it is surely significant that all the Axial Age religions 
emphasized the importance of charity, a concept that had barely 
existed before. Pure greed and pure generosity are complementary 
concepts; neither could really be imagined without the other; both 
could only arise in institutional contexts that insisted on such pure 
and single-minded behavior; and both seem to have appeared to- 
gether wherever impersonal, physical, cash money also appeared on 
the scene. 



As for the religious movements: it would be easy enough to write 
them off as escapist, as promising the victims of the Axial Age em- 
pires liberation in the next world as a way of letting them accept their 
lot in this one, and convincing the rich that all they really owed the 
poor were occasional charitable donations. Radical thinkers almost 
invariably do write them off in this way. Surely, the willingness of 
the governments themselves to eventually embrace them would seem 
to support this conclusion. But the issue is more complicated. First of 
all, there is something to be said for escapism. Popular uprisings in 
the ancient world usually ended in the massacre of the rebels. As I've 
already observed, physical escape, such as via exodus or defection, 
has always been the most effective response to oppressive conditions 
since the earliest times we know about. Where physical escape is not 
possible, what, exactly, is an oppressed peasant supposed to do? Sit 
and contemplate her misery? At the very least, otherworldly religions 
provided glimpses of radical alternatives. Often they allowed people 
to create other worlds within this one, liberated spaces of one sort or 
another. It is surely significant that the only people who succeeded in 
abolishing slavery in the ancient world were religious sects, such as the 
Essenes — who did so, effectively, by defecting from the larger social 
order and forming their own Utopian communities. 81 Or, in a smaller 
but more enduring example: the democratic city-states of northern In- 
dia were all eventually stamped out by the great empires (Kautilya 
provides extensive advice on how to subvert and destroy democratic 
constitutions), but the Buddha admired the democratic organization of 
their public assemblies and adopted it as the model for his followers. 82 
Buddhist monasteries are still called sangha, the ancient name for such 
republics, and continue to operate by the same consensus-finding pro- 
cess to this day, preserving a certain egalitarian democratic ideal that 
would otherwise have been entirely forgotten. 

Finally, the larger historical achievements of these movements are 
not, in fact, insignificant. As they took hold, things began to change. 
Wars became less brutal and less frequent. Slavery faded as an in- 
stitution, to the point at which, by the Middle Ages, it had become 
insignificant or even nonexistent across most of Eurasia. Everywhere 
too, the new religious authorities began to seriously address the social 
dislocations introduced by debt. 

Chapter Ten 


(600 -1450 AD) 

Artificial wealth comprises the things 
which of themselves satisfy no natu- 
ral need, for example money, which is a 
human contrivance. 

— St. Thomas Aquinas 

IF THE AXIAL AGE saw the emergence of complementary ideals of 
commodity markets and universal world religions, the Middle Ages 
were the period in which those two institutions began to merge. 

Everywhere, the age began with the collapse of empires. Eventual- 
ly, new states formed, but in these new states, the nexus between war, 
bullion, and slavery was broken; conquest and acquisition for their 
own sake were no longer celebrated as the end of all political life. At 
the same time, economic life, from the conduct of international trade 
to the organization of local markets, came to fall increasingly under 
the regulation of religious authorities. One result was a widespread 
movement to control, or even forbid, predatory lending. Another was 
a return, across Eurasia, to various forms of virtual credit money. 

Granted, this is not the way we're used to thinking of the Middle 
Ages. For most of us, "Medieval" remains a synonym for superstition, 
intolerance, and oppression. Yet for most of the earth's inhabitants, it 
could only be seen as an extraordinary improvement over the terrors 
of the Axial Age. 

One reason for our skewed perception is that we're used to think- 
ing of the Middle Ages as something that happened primarily in West- 
ern Europe, in territories that had been little more than border outposts 
of the Roman Empire to begin with. According to the convention- 
al wisdom, with the collapse of the empire, the cities were largely 



abandoned and the economy "reverted to barter," taking at least five 
centuries to recover. Even for Europe, though, this is based on a series 
of unquestioned assumptions that, as I've said, crumble the moment 
one starts seriously poking at them. Chief among them is the idea that 
the absence of coins means the absence of money. True, the destruction 
of the Roman war machine also meant that Roman coins went out of 
circulation; and the few coins produced within the Gothic or Frankish 
kingdoms that established themselves over the ruins of the old empire 
were largely fiduciary in nature. 1 Still, a glance at the "barbarian law 
codes" reveals that even at the height of the Dark Ages, people were still 
carefully keeping accounts in Roman money as they calculated interest 
rates, contracts, and mortgages. Again, cities shriveled, and many were 
abandoned, but even this was something of a mixed blessing. Certainly, 
it had a terrible effect on literacy; but one must also bear in mind that 
ancient cities could only be maintained by extracting resources from 
the countryside. Roman Gaul, for instance, had been a network of 
cities, connected by the famous Roman roads to an endless succession 
of slave plantations, which were owned by the urban grandees. 2 After 
around 400 ad, the population of the towns declined radically, but the 
plantations also disappeared. In the following centuries, many came to 
be replaced by manors, churches, and even later, castles — where new 
local lords extracted their own dues from the surrounding farmers. But 
one need only do the math: since Medieval agriculture was no less ef- 
ficient than ancient agriculture (in fact, it rapidly became a great deal 
more so), the amount of work required to feed a handful of mounted 
warriors and clergymen could not possibly have been anything like that 
required to feed entire cities. However oppressed Medieval serfs might 
have been, their plight was nothing compared with that of their Axial 
Age equivalents. 

Still, the Middle Ages proper are best seen as having begun not 
in Europe but in India and China, between 400 and 600 ad, and then 
sweeping across much of the western half of Eurasia with the advent of 
Islam. They only really reached Europe four hundred years later. Let 
us begin our story, then, in India. 

Medieval India 
(Flight into Hierarchy) 

I left off in India with Asoka's embrace of Buddhism, but I noted that 
ultimately, his project foundered. Neither his empire nor his church 



was to endure. It took a good deal of time, however, for this failure 
to occur. 

The Mauryans represented a high watermark of empire. The next 
five hundred years saw a succession of kingdoms, most of them strong- 
ly supportive of Buddhism. Stupas and monasteries sprang up every- 
where, but the states that sponsored them grew weaker and weaker; 
centralized armies dissolved; soldiers, like officials, increasingly came 
to be paid by land grants rather than salaries. As a result, the number 
of coins in circulation steadily declined. 3 Here too, the early Middle 
Ages witnessed a dramatic decline of cities: where the Greek ambassa- 
dor Megasthenes described Asoka's capital of Patna as the largest city 
in the world of his day, Medieval Arab and Chinese travelers described 
India as a land of endless tiny villages. 

As a result, most historians have come to write, much as they do 
in Europe, of a collapse of the money economy; of commerce becom- 
ing a "reversion to barter." Here too, this appears to be simply untrue. 
What vanished were the military means to extract resources from the 
peasants. In fact, Hindu law-books written at the time show increasing 
attention to credit arrangements, with a sophisticated language of sure- 
ties, collateral, mortgages, promissory notes, and compound interest. 4 
One need only consider how the Buddhist establishments popping up 
all over India during these centuries were funded. While the earliest 
monks were wandering mendicants, owning little more than their beg- 
ging bowls, early Medieval monasteries were often magnificent estab- 
lishments with vast treasuries. Still, in principle, their operations were 
financed almost entirely through credit. 

The key innovation was the creation of what were called the "per- 
petual endowments" or "inexhaustible treasuries." Say a lay supporter 
wished to make a contribution to her local monastery. Rather than 
offering to provide candles for a specific ritual, or servants to attend to 
the upkeep of the monastic grounds, she would provide a certain sum 
of money — or something worth a great deal of money — that would 
then be loaned out in the name of the monastery, at the accepted 15 
-percent annual rate. The interest on the loan would then be earmarked 
for that specific purpose. 5 An inscription discovered at the Great Mon- 
astery of Sanci sometime around 450 ad provides a handy illustration. 
A woman named Harisvamini donates the relatively modest sum of 
twelve dinar as to the "Noble Community of Monks." 6 The text care- 
fully inscribes how the income is to be divided up: the interest on five 
of the dinaras was to provide daily meals for five different monks, 
the interest from another three would pay to light three lamps for 
the Buddha, in memory of her parents, and so forth. The inscription 



ends by saying that this was a permanent endowment, "created with a 
document in stone to last as long as the moon and the sun": since the 
principal would never be touched, the contribution would last forever. 7 

Some of these loans presumably went to individuals, others were 
commercial loans to "guilds of bamboo-workers, braziers, and pot- 
ters," or to village assemblies. 8 We have to assume that in most cases 
the money is an accounting unit: what were really being transacted 
were animals, wheat, silk, butter, fruit, and all the other goods whose 
appropriate rates of interest were so carefully stipulated in the law- 
codes of the time. Still, large amounts of gold did end up flowing into 
monastic coffers. When coins go out of circulation, after all, the metal 
doesn't simply disappear. In the Middle Ages — and this seems to have 
been true across Eurasia — the vast majority of it ended up in religious 
establishments, churches, monasteries, and temples, either stockpiled 
in hoards and treasuries or gilded onto or cast into altars, sanctums, 
and sacred instruments. Above all, it was shaped into images of gods. 
As a result, those rulers who did try to put an Axial Age-style coin- 
age system back into circulation — invariably, to fund some project of 
military expansion — often had to pursue self-consciously anti-religious 
policies in order to do so. Probably the most notorious was one Harsa, 
who ruled Kashmir from 1089 to 1101 ad, who is said to have ap- 
pointed an officer called the "Superintendent for the Destruction of the 
Gods." According to later histories, Harsa employed leprous monks to 
systematically desecrate divine images with urine and excrement, thus 
neutralizing their power, before dragging them off to be melted down. 9 
He is said to have destroyed more than four thousand Buddhist estab- 
lishments before being betrayed and killed, the last of his dynasty — and 
his miserable fate was long held out as an example of where the revival 
of the old ways was likely to lead one in the end. 

For the most part, then, the gold remained sacrosanct, laid up in 
the sacred places — though in India, over time these were increasingly 
Hindu ones, not Buddhist. What we now see as traditional Hindu- 
village India appears to have been largely a creation of the early Middle 
Ages. We do not know precisely how it happened. As kingdoms contin- 
ued to rise and fall, the world inhabited by kings and princes became 
increasingly distant from that of most people's everyday affairs. During 
much of the period immediately following the collapse of the Mau- 
ryan empire, for instance, much of India was governed by foreigners. 10 
Apparently, this increasing distance allowed local Brahmins to begin 
reshaping the new — increasingly rural — society along strictly hierarchi- 
cal principles. 



They did it above all by seizing control of the administration of 
law. The Dharmasastra, law-codes produced by Brahmin scholars be- 
tween roughly 200 BC and 400 ad, give us a good idea of the new vision 
of society. In it, old ideas like the Vedic conception of a debt to gods, 
sages, and ancestors were resuscitated — but now, they applied only and 
specifically to Brahmins, whose duty and privilege it was to stand in for 
all humanity before the forces that controlled the universe." Far from 
being required to attain learning, members of the inferior classes were 
forbidden to do so: the Laws of Manu, for instance, set down that any 
Sudra (the lowest caste, assigned to farming and material production) 
who so much as listened in on the teaching of the law or sacred texts 
should have molten lead poured into their ears; on the occasion of a 
repeat offense, have their tongues cut out. 12 At the same time Brahmins, 
however ferociously they guarded their privileges, also adopted aspects 
of once-radical Buddhist and Jain ideas like karma, reincarnation, and 
ahimsa. Brahmins were expected to refrain from any sort of physical 
violence, and even to become vegetarians. In alliance with representa- 
tives of the old warrior caste, they also managed to win control of most 
of the land in the ancient villages. Artisans and craftsmen fleeing the 
decline or destruction of cities often ended up as suppliant refugees, 
and, gradually, low-caste clients. The result were increasingly complex 
local patronage systems in the countryside — jajmani systems, as they 
came to be known — where the refugees provided services for the land- 
owning castes, who took on many of the roles once held by the state, 
providing protection and justice, extracting labor dues, and so on — but 
also protected local communities from actual royal representatives. 13 

This latter function is crucial. Foreign visitors were later to be 
awed by the self-sufficiency of the traditional Indian village, with its 
elaborate system of landowning castes, farmers, and such "service 
castes" as barbers, smiths, tanners, drummers, and washermen, all ar- 
ranged in hierarchical order, each seen as making its own unique and 
necessary contribution to their little society, all of it typically operat- 
ing entirely without the use of metal currency. It was only possible 
for those reduced to the status of Sudras and Untouchables to have 
a chance of accepting their lowly position because the exaction of lo- 
cal landlords was, again, on nothing like the same scale as that under 
earlier governments — under which villagers had to support cities of up- 
wards of a million people — and because the village community became 
an effective means of holding the state and its representatives at least 
partially at bay. 

We don't know the mechanisms that brought this world about, but 
the role of debt was surely significant. The creation of thousands of 



Hindu temples alone must have involved hundreds of thousands, even 
millions, of interest-bearing loans — since, while Brahmins were them- 
selves forbidden to lend money at interest, temples were not. We can 
already see, in the earliest of the new law-codes, the Laws of Manu, the 
way that local authorities were struggling to reconcile old customs like 
debt peonage and chattel slavery with the desire to establish an over- 
arching hierarchical system in which everyone knew their place. The 
Laws of Manu carefully classify slaves into seven types depending on 
how they were reduced to slavery (war, debt, self-sale . . .) and explain 
the conditions under which each might be emancipated — but then go 
on to say that Sudras can never really be emancipated, since, after all, 
they were created to serve the other castes. 14 Similarly, where earlier 
codes had established a 15-percent annual rate of interest, with excep- 
tions for commercial loans," the new codes organized interest by caste: 
stating that one could charge a maximum of 2 percent a month for 
a Brahmin, 3 percent for a Ksatriya (warrior), 4 percent for a Vaisya 
(merchant), and 5 percent for a Sudra — which is the difference between 
24 percent annually on the one extreme and a hefty 60 percent on the 
other. 16 The laws also identify five different ways interest can be paid, 
of which the most significant for our concerns is "bodily interest": 
physical labor in the creditor's house or fields, to be rendered until such 
time as the principal is cleared. Even here, though, caste considerations 
were paramount. No one could be forced into the service of anyone 
of lower caste; moreover, since debts were enforceable on a debtor's 
children and even grandchildren, "until the principal is cleared" could 
mean quite some time — as the Indian historian R.S. Sharma notes, such 
stipulations "remind us of the present practice according to which sev- 
eral generations of the same family have been reduced to the position 
of hereditary ploughmen in consideration of some paltry sum advanced 
to them." 17 

Indeed, India has become notorious as a country, in which a very 
large part of the working population is laboring in effective debt peon- 
age to a landlord or other creditor. Such arrangements became even 
easier over time. By about 1000 ad, restrictions on usury by members 
of the upper castes in Hindu law-codes largely disappeared. On the 
other hand, 1000 ad was about the same time that Islam appeared 
in India — a religion dedicated to eradicating usury altogether. So at 
the very least we can say that these things never stopped being con- 
tested. And even Hindu law of that time was far more humane than 
almost anything found in the ancient world. Debtors were not, gener- 
ally speaking, reduced to slavery, and there is no widespread evidence 
of the selling of women or children. In fact, overt slavery had largely 



vanished from the countryside by this time. And debt peons were not 
even pawns, exactly; by law, they were simply paying interest on a 
freely contracted agreement. Even when that took generations, the law 
stipulated that even if the principal was never paid, in the third genera- 
tion, they would be freed. 

There is a peculiar tension here: a kind of paradox. Debt and 
credit arrangements may well have played a crucial role in creating the 
Indian village system, but they could never really become their basis. It 
might have made a certain sense to declare that, just as Brahmins had 
to dispatch their debts to the gods, everyone should be, in a certain 
sense, in debt to those above them. But in another sense, that would 
have completely subverted the very idea of caste, which was that the 
universe was a vast hierarchy in which different sorts of people were 
assumed to be of fundamentally different natures, that these ranks and 
grades were fixed forever, and that when goods and services moved 
up and down the hierarchy, they followed not principles of exchange 
at all but (as in all hierarchical systems) custom and precedent. The 
French anthropologist Louis Dumont made the famous argument that 
one cannot even really talk about "inequality" here, because to use 
that phrase implies that one believes people should or could be equal, 
and this idea was completely alien to Hindu conceptions. 18 For them 
to have imagined their responsibilities as debts would have been pro- 
foundly subversive, since debts are by definition arrangements between 
equals — at least in the sense that they are equal parties to a contract — 
that could and should be repaid. 19 

Politically, it is never a particularly good idea to first tell people 
they are your equals, and then humiliate and degrade them. This is 
presumably why peasant insurrections, from Chiapas to Japan, have so 
regularly aimed to wipe out debts, rather than focus on more structural 
issues like caste systems, or even slavery. 20 The British Raj discov- 
ered this to their occasional chagrin when they used debt peonage — 
superimposed on the caste system — as the basis of their labor system 
in colonial India. Perhaps the paradigmatic popular insurrection was 
the Deccan riots of 1875, when indebted farmers rose up to seize and 
systematically destroy the account books of local money-lenders. Debt 
peonage, it would appear, is far more likely to inspire outrage and col- 
lective action than is a system premised on pure inequality. 




Buddhism and the Economy of Infinite Debt 

By Medieval standards, India was unusual for resisting the appeal of 
the great Axial Age religions, but we observe the basic pattern: the 
decline of empire, armies, and cash economy, the rise of religious au- 
thorities, independent of the state, who win much of their popular 
legitimacy through their ability to regulate emerging credit systems. 

China might be said to represent the opposite extreme. This was 
the one place where a late Axial Age attempt to yoke empire and re- 
ligion together was a complete success. True, here as elsewhere, there 
was an initial period of breakdown: after the collapse of the Han dy- 
nasty around 220 ad, the central state broke apart, cities shrank, coins 
disappeared, and so on. But in China this was only temporary. As Max 
Weber long ago pointed out, once one sets up a genuinely effective 
bureaucracy, it's almost impossible to get rid of it. And the Chinese 
bureaucracy was uniquely effective. Before long, the old Han system 
reemerged: a centralized state, run by Confucian scholar-gentry trained 
in the literary classics, selected through a national exam system, work- 
ing in meticulously organized national and regional bureaus where the 
money supply, like other economic matters, was continually monitored 
and regulated. Chinese monetary theory was always chartalist. This 
was partly just an effect of size: the empire and its internal market were 
so huge that foreign trade was never especially important; therefore, 
those running the government were well aware that they could turn 
pretty much anything into money, simply by insisting that taxes be 
paid in that form. 

The two great threats to the authorities were always the same: 
the nomadic peoples to the north (who they systematically bribed, but 
who nonetheless periodically swept over and conquered sections of 
China) and popular unrest and rebellion. The latter was almost con- 
stant, and on a scale unknown anywhere else in human history. There 
were decades in Chinese history when the rate of recorded peasant 
uprisings was roughly 1.8 per hour. 11 What's more, such uprisings were 
frequently successful. Most of the most famous Chinese dynasties that 
were not the product of barbarian invasion (the Yuan or Qing) were 
originally peasant insurrections (the Han, Tang, Sung, and Ming). In 
no other part of the world do we see anything like this. As a result, 
Chinese statecraft ultimately came down to funneling enough resources 
to the cities to feed the urban population and keep the nomads at 



bay, without causing a notoriously contumacious rural population to 
rise up in arms. The official Confucian ideology of patriarchal au- 
thority, equal opportunity, promotion of agriculture, light taxes, and 
careful government control of merchants seemed expressly designed 
to appeal to the interests and sensibilities of a (potentially rebellious) 
rural patriarch. 22 

One need hardly add that in these circumstances, limiting the dep- 
redations of the local village loan shark — the traditional bane of rural 
families — was a constant government concern. Over and over we hear 
the same familiar story: peasants down on their luck, whether due to 
natural disaster or the need to pay for a parent's funeral — would fall 
into the hands of predatory lenders, who would seize their fields and 
houses, forcing them to work or pay rent in what had once been their 
own lands; the threat of rebellion would then drive the government 
to institute a dramatic program of reforms. One of the first we know 
about came in the form of a coup d'etat in 9 ad, when a Confucian 
official named Wang Mang seized the throne to deal (so he claimed) 
with a nationwide debt crisis. According to proclamations made at the 
time, the practice of usury had caused the effective tax rate (that is, the 
amount of the average peasant's harvest that ended up being carried 
off by someone else) to rise from just over 3 percent, to 50 percent. 23 
In reaction, Wang Mang instituted a program reforming the currency, 
nationalizing large estates, promoting state-run industries — including 
public granaries — and banning private holding of slaves. Wang Mang 
also established a state loan agency that would offer interest-free fu- 
neral loans for up to ninety days for those caught unprepared by the 
death of relatives, as well as long-term loans of 3 percent monthly or 
10 percent annual income rates for commercial or agricultural invest- 
ments. 24 "With this scheme," one historian remarks, "Wang was confi- 
dent that all business transactions would be under his scrutiny and the 
abuse of usury would be forever eradicated." 23 

Needless to say, it was not, and later Chinese history is full of 
similar stories: widespread inequality and unrest followed by the ap- 
pointment of official commissions of inquiry, regional debt relief (either 
blanket amnesties or annulments of all loans in which interest had ex- 
ceeded the principal), cheap grain loans, famine relief, laws against the 
selling of children. 26 All this became the standard fare of government 
policy. It was very unevenly successful; it certainly did not create an 
egalitarian peasant Utopia, but it prevented any widespread return to 
Axial Age conditions. 

We are used to thinking of such bureaucratic interventions — 
particularly the monopolies and regulations — as state restriction on 



"the market" — owing to the prevailing prejudice that sees markets as 
quasi-natural phenomena that emerge by themselves, and governments 
as having no role other than to squelch or siphon from them. I have 
repeatedly pointed out how mistaken this is, but China provides a 
particularly striking example. The Confucian state may have been the 
world's greatest and most enduring bureaucracy, but it actively pro- 
moted markets, and as a result, commercial life in China soon became 
far more sophisticated, and markets more developed, than anywhere 
else in the world. 

This despite the fact that Confucian orthodoxy was overtly hostile 
to merchants and even the profit motive itself. Commercial profit was 
seen as legitimate only as compensation for the labor that merchants 
expended in transporting goods from one place to another, but never 
as fruits of speculation. What this meant in practice was that they were 
pro-market but anti-capitalist. 

Again, this seems bizarre, since we're used to assuming that capital- 
ism and markets are the same thing, but, as the great French historian 
Fernand Braudel pointed out, in many ways they could equally well be 
conceived as opposites. While markets are ways of exchanging goods 
through the medium of money — historically, ways for those with a sur- 
plus of grain to acquire candles and vice versa (in economic shorthand, 
C-M-C, for commodity-money-other commodity) — capitalism is first 
and foremost the art of using money to get more money (M-C-M'). 
Normally, the easiest way to do this is by establishing some kind of 
formal or de facto monopoly. For this reason, capitalists, whether mer- 
chant princes, financiers, or industrialists, invariably try to ally them- 
selves with political authorities to limit the freedom of the market, so as 
to make it easier for them to do so. 27 From this perspective, China was 
for most of its history the ultimate anti-capitalist market state. 28 Unlike 
later European princes, Chinese rulers systematically refused to team 
up with would-be Chinese capitalists (who always existed). Instead, 
like their officials, they saw them as destructive parasites — though, un- 
like the usurers, ones whose fundamentally selfish and antisocial mo- 
tivations could still be put to use in certain ways. In Confucian terms, 
merchants were like soldiers. Those drawn to a career in the military 
were assumed to be driven largely by a love of violence. As individuals, 
they were not good people; but they were also necessary to defend the 
frontiers. Similarly, merchants were driven by greed and basically im- 
moral; yet if kept under careful administrative supervision, they could 
be made to serve the public good." Whatever one might think of the 
principles, the results are hard to deny. For most of its history, China 
maintained the highest standard of living in the world — even England 



only really overtook it in perhaps the 1820s, well past the time of the 
Industrial Revolution. 30 

Confucianism is not precisely a religion, perhaps; it is usually con- 
sidered more an ethical and philosophical system. So China too could 
be considered something of a departure from the common Medieval 
pattern, whereby commerce was, almost everywhere, brought under 
the control of religion. But it wasn't a complete departure. One need 
only consider the remarkable economic role of Buddhism in this same 
period. Buddhism had arrived in China through the Central Asia cara- 
van routes and in its early days was largely a religion promoted by 
merchants, but in the chaos following the collapse of the Han dynasty 
in 220 ad, it began to take popular roots. The Liang (502-557) and 
Tang (618-907) dynasties saw outbreaks of passionate religious fervor, 
in which thousands of rural young people across China would re- 
nounce their farms, shops, and families to seek ordination as Buddhist 
monks and nuns; where merchants or landed magnates pledged their 
entire fortunes to the propagation of the Dharma; building projects 
hollowed out whole mountains to create bodhisattvas and giant statues 
of the Buddha; and pageants where monks and devotees ritually burned 
their heads and hands or, in some instances, set themselves on fire. By 
the mid-fifth century, there were dozens of such spectacular suicides; 
they became, as one historian put it "a macabre kind of fashion." 31 

Historians differ over their meaning. Certainly the passions un- 
leashed provided a dramatic alternative to the staid orthodoxy of the 
Confucian literati, but it's also surprising, to say the least, to see this 
in a religion promoted above all by the commercial classes. The French 
Sinologist Jacques Gernet observes: 

It is clear that these suicides, so contrary to traditional moral- 
ity, aimed to redeem the sins of all beings, to compel the gods 
and men at one and the same time. And they were staged: 
usually, in the fifth century, a pyre was erected on a mountain. 
The suicide took place in the presence of a large crowd uttering 
lamentations and bringing forward rich offerings. People of all 
social ranks attended the spectacle together. After the fire had 
burned out, the ashes of the monk were collected and a stupa, 
a new place of worship, was created to house them. 32 

Gernet's picture of dozens of Christ-like redeemers seems overstat- 
ed, but the precise meaning of these suicides was unclear — and widely 
debated — even in the Middle Ages. Some contemporaries saw them as 
the ultimate expression of contempt for the body; others as recognition 



of the illusory nature of the self and all material attachments; yet oth- 
ers, as the ultimate form of charity, the giving of that which can only 
be most precious, one's very physical existence, as a sacrifice to the 
benefit of all living things; a sentiment that one tenth-century biogra- 
pher expressed in the following verses: 

To give away the thing that is difficult to part with, 
Is the best offering amongst the alms. 
Let this impure and sinful body, 
Turn into something like a diamond. 3 ' 

That is, an object of eternal value, an investment that can bear 
fruit for all eternity. 

I draw attention to this because this sentiment provides an elegant 
illustration of a problem that seems to have first appeared in the world 
with notions of pure charity that always seemed to accompany Axial 
Age religions, and which provided endless philosophical conundrums. 
In human economies, it does not appear to have occurred to anyone 
that any act could be either purely selfish or purely altruistic. As I 
noted in chapter five, an act of absolute selfless giving can only also be 
absolutely antisocial — hence in a way, inhuman. It is merely the mirror 
image of an act of theft or even murder; hence, it makes a certain sort 
of sense that suicide be conceived as the ultimate selfless gift. Yet this 
is the door that necessarily opens as soon as one develops a notion of 
"profit" and then tries to conceive its opposite. 

This tension seems to hang over the economic life of Medieval 
Chinese Buddhism, which, true to its commercial origins, retained a 
striking tendency to employ the language of the marketplace. "One 
purchases felicity, and sells one's sins," wrote one monk, "just as 
in commercial operations." 34 Nowhere was this so true as in those 
schools, such as the School of the Three Stages, that adopted the notion 
of "karmic debt" — that each of the sins of one's accumulated past lives 
continues as a debt needing to be discharged. An obscure and unusual 
view in classical Indian Buddhism, the notion of karmic debt took on 
a powerful new life in China. 35 As one Three Stages text puts it, we all 
know that insolvent debtors will be reborn as animals or slaves; but 
in reality, we are all insolvent debtors, because acquiring the money to 
repay our temporal debts necessarily means acquire new, spiritual ones, 
since every means of acquiring wealth will necessarily involve exploit- 
ing, damaging, and causing suffering to other living beings. 

Some use their power and authority as officials in order to bend 
the law and seize wealth. Some prosper in the marketplace . . . 



They engage in an excess of lies and cheat and extort prof- 
its from others. Still others, farmers, burn the mountains and 
marshes, flood the fields, plough and mill, destroying the nests 
and burrows of animals . . . 

There is no avoiding the fact of our past debts, and it is 
difficult to comprehend the number of separate lives it would 
require if you wanted to pay them one by one."' 

As Gernet remarks, the idea of life as an endless burden of debt 
would surely have struck a chord with Chinese villagers, for whom 
this was all too often literally true; but, as he also points out, like their 
counterparts in ancient Israel, they were also familiar with that sense 
of sudden liberation that came with official amnesties. There was a 
way to achieve that too. All that was required was to make regular 
donations to some monastery's Inexhaustible Treasury. The moment 
one does so, the debts from every one of one's past lives are instantly 
blotted out. The author even provides a little parable, not unlike Je- 
sus's parable of the ungrateful servant, but far more optimistic. How, 
it might be asked, would a poor man's tiny contribution possibly have 
such cosmic effects? 

Answer: In a parable it is like a poor man burdened by a debt 
of one thousand strings of coins to another person. He always 
suffers from his debt, and the poor man is afraid whenever the 
debt-master comes to collect. 

He visits the rich man's house and confesses he is beyond 
the time-limit and begs forgiveness for his offense — he is poor 
and without a station in life. He tells him that each day he 
makes a single coin he will return it to the rich man. On hear- 
ing this, the rich man is very pleased and forgives him for being 
overdue; moreover, the poor man is not dragged away to jail. 

Giving to the Inexhaustible Storehouse is also like this. 37 

One might almost call this salvation on the installment plan — but 
the implication is that the payments shall be made, like the interest 
payments on the wealth when it is subsequently loaned out, for all 

Other schools concentrated not on karmic debt, but on one's debt 
to one's parents. Where Confucians built their system of morality 
above all on filial piety to fathers, Chinese Buddhists were primarily 
concerned with mothers; with the care and suffering required in rais- 
ing, feeding, and educating children. A mother's kindness is unlimited, 
her selflessness absolute; this was seen to be embodied above all in the 



act of breastfeeding, the fact that mothers transform their very flesh 
and blood into milk; they feed their children with their own bodies. In 
doing so, however, they allow unlimited love to be precisely quantified. 
One author calculated that the average infant absorbs precisely 180 
pecks of mother's milk in its first three years of life, and this consti- 
tutes its debt as an adult. The figure soon became canonical. To repay 
this milk debt, or indeed one's debt to one's parents more generally, 
was simply impossible. "If you stacked up jewels from the ground up 
to the twenty-eighth heaven," wrote one Buddhist author, "it would 
not compare" with the value of your parent's nurturance. 38 Even if you 
were to "cut your own flesh to offer her three times a day for four bil- 
lion years," wrote another, "it would not pay back even a single day" 
of what your mother did for you. 39 

The solution, however, is the same: donating money to the Inex- 
haustible Treasuries. The result was an elaborate cycle of debts and 
forms of redemption. A man begins with an unpayable milk-debt. The 
only thing of comparable value is the Dharma, the Buddhist truth it- 
self. One can thus repay one's parents by bringing them to Buddhism; 
indeed, this can be done even after death, when one's mother will oth- 
erwise wind up as a hungry ghost in hell. If one makes a donation to 
the Inexhaustible Treasuries in her name, sutras will be recited for her; 
she will be delivered; the money, in the meantime, will be put partly to 
work as charity, as pure gift, but partly, too, as in India, as interest- 
bearing loans, earmarked for specific purposes for the furtherance of 
Buddhist education, ritual, or monastic life. 

The Chinese Buddhist approach to charity was nothing if not mul- 
tifaceted. Festivals often led to vast outpourings of contributions, with 
wealthy adherents vying with one another in generosity, often driving 
their entire fortunes to the monasteries, in the forms of oxcarts laden 
with millions of strings of cash — a kind of economic self-immolation 
that paralleled the spectacular monastic suicides. Their contributions 
swelled the Inexhaustible Treasuries. Some would be given to the needy, 
particularly in times of hardship. Some would be loaned. One practice 
that hovered between charity and business was providing peasants with 
alternatives to the local moneylender. Most monasteries had attendant 
pawnshops where the local poor could place some valuable posses- 
sion — a robe, a couch, a mirror — in hock in exchange for low-interest 
loans. 40 Finally, there was the business of the monastery itself: that por- 
tion of the Inexhaustible Treasury turned over to the management of 
lay brothers, and either put out at loan or invested. Since monks were 
not allowed to eat the products of their own fields, the fruit or grain 
had to be put on the market, further swelling monastic revenues. Most 



monasteries came to be surrounded not only by commercial farms but 
veritable industrial complexes of oil presses, flour mills, shops, and 
hostels, often with thousands of bonded workers. 41 At the same time, 
the Treasuries themselves became — as Gernet was perhaps the first to 
point out — the world's first genuine forms of concentrated finance capi- 
tal. They were, after all, enormous concentrations of wealth managed 
by what were in effect monastic corporations, which were constantly 
seeking new opportunities for profitable investment. They even shared 
the quintessential capitalist imperative of continual growth; the Trea- 
suries had to expand, since according to Mahayana doctrine, genu- 
ine liberation would not be possible until the whole world embraced 
the Dharma. 42 

This was precisely the situation — huge concentrations of capital in- 
terested in nothing more than profit — that Confucian economic policy 
was supposed to prevent. Still, it took some time for Chinese govern- 
ments to recognize the threat. Government attitudes veered back and 
forth. At first, especially in the chaotic years of the early Middle Ages, 
monks were welcomed — even given generous land grants and provided 
with convict laborers to reclaim forests and marshes, and tax-exempt 
status for their business enterprises. 4 ' A few emperors converted, and 
while most of the bureaucracy kept the monks at arm's length, Bud- 
dhism became especially popular with court women, as well as with 
eunuchs and many scions of wealthy families. As time went on, though, 
administrators turned from seeing monks as a boon to rural society to 
its potential ruination. Already, by 511 ad, there were decrees condemn- 
ing monks for diverting grain that was supposed to be used for charita- 
ble purposes to high-interest loans, and altering debt contracts — a gov- 
ernment commission had to be appointed to review the accounts and 
nullify any loans in which interest was found to have exceeded princi- 
pal. In 713 ad we have another decree, confiscating two Inexhaustible 
Treasuries of the Three Stages sect, whose members they accused of 
fraudulent solicitation. 44 Before long there were major campaigns of 
government repression, at first often limited to certain regions, but over 
time, more often empire-wide. During the most severe, carried out in 
845 ad, a total of 4,600 monasteries were razed along with their shops 
and mills, 260,000 monks and nuns forcibly defrocked and returned to 
their families — but at the same time, according to government reports, 
150,000 temple serfs released from bondage. 

Whatever the real reasons behind the waves of repression (and 
these were no doubt many), the official reason was always the same: 
a need to restore the money supply. The monasteries were becoming 



so large, and so rich, administrators insisted, that China was simply 
running out of metal: 

The great repressions of Buddhism under the Chou emperor 
Wu between 574 and 577, under Wu-tsung in 842-845, and 
finally in 955, presented themselves primarily as measures of 
economic recovery: each of them provided an opportunity 
for the imperial government to procure the necessary copper 
for the minting of new coins. 45 

One reason is that monks appear to have been systematically melt- 
ing down strings of coins, often hundreds of thousands at a time, to 
build colossal copper or even gilded copper statues of the Buddha — 
along with other objects such as bells and copper chimes, or even 
such extravagances as mirrored halls or gilded copper roof tiles. The 
result, according to official commissions of inquiry, was economi- 
cally disastrous: the price of metals would soar, coinage disappear, 
and rural marketplaces cease to function, even as those rural people 
whose children had not become monks often fell deeper into debt to 
the monasteries. 

It perhaps stands to reason that Chinese Buddhism, a religion of mer- 
chants that then took popular roots, should have developed in this di- 
rection: a genuine theology of debt, even perhaps a practice of absolute 
self-sacrifice, of abandoning everything, one's fortune or even one's life, 
that ultimately led to collectively managed finance capital. The reason 
that the result seems so weird, so full of paradoxes, is that it is again 
an attempt to apply the logic of exchange to questions of Eternity. 

Recall an idea from earlier in the book: exchange, unless it's an 
instantaneous cash transaction, creates debts. Debts linger over time. If 
you imagine all human relations as exchange, then insofar as people do 
have ongoing relations with one another, those relations are laced with 
debt and sin. The only way out is to annihilate the debt, but then social 
relations vanish too. This is quite in accord with Buddhism, whose ul- 
timate aim is indeed the attainment of "emptiness," absolute liberation, 
the annihilation of all human and material attachments, since these are 
all ultimately causes of suffering. For Mahayana Buddhists, however, 
absolute liberation cannot be achieved by any one being independently; 
the liberation of each depends on all the others; therefore, until the end 
of time, such matters are in a certain sense always in suspension. 



In the meantime, exchange dominates: "One purchases felicity, and 
sells one's sins, just as in commercial operations." Even acts of charity 
and self-sacrifice are not purely generous; one is purchasing "merit" 
from the bodhisattvas. 4 * The notion of infinite debt comes in when this 
logic slams up against the Absolute, or, one might perhaps better say, 
against something that utterly defies the logic of exchange. Because 
there are things that do. This would explain, for instance, the odd urge 
to first quantify the exact amount of milk one has absorbed at one's 
mother's breast, and then to say that there is no conceivable way to 
repay it. Exchange implies interaction between equivalent beings. Your 
mother, on the other hand, is not an equivalent being. She created 
you out of her own flesh. This is exactly the point that I suggested 
the Vedic authors were subtly trying to make when they talked about 
"debts" to the gods: of course you cannot really "pay your debt to the 
universe" — that would imply that (i) you and (2) everything that exists 
(including you) are in some sense equivalent entities. This is clearly 
absurd. The closest you can come to repayment is to simply recognize 
that fact. Such recognition is the true meaning of sacrifice. Like Ros- 
pabe's original money, a sacrificial offering is not a way to pay a debt, 
but a way to acknowledge the impossibility of the idea that there could 
ever be repayment: 

The parallel was not missed in certain mythological traditions. 
According to one famous Hindu myth, two gods, the brothers 
Kartikeya and Ganesha, had a quarrel over who should be 
the first to marry. Their mother Parvati suggested a contest: 
the winner would be the one to most quickly circle the entire 
universe. Kartikeya set off on the back of a giant peacock. It 
took him three years to transverse the limits of the cosmos. 
Ganesha bided his time, then, finally, walked in a circle around 
his mother, remarking, "You are the universe to me." 

I've also argued that any system of exchange is always necessarily 
founded on something else, something that, in its social manifesta- 
tion at least, is ultimately communism. With all those things that we 
treat as eternal, that we assume will always be there — our mother's 
love, true friendship, sociality, humanity, belonging, the existence of 
the cosmos — no calculation is necessary, or even ultimately possible; 
insofar as there is give and take, they follow completely different prin- 
ciples. What, then, happens to such absolute and unlimited phenomena 
when one tries to imagine the world as a set of transactions — as ex- 
change? Generally, one of two things. We either ignore or deify them. 



(Mothers, and caregiving women in general, are a classic case in point.) 
Or we do both. What we treat as eternal in our actual relations with 
one another vanishes and reappears as an abstraction, an absolute. 47 
In the case of Buddhism, this was framed as the inexhaustible merit 
of bodhisatt-vas, who exist, in a certain sense, outside of time. They 
are at once the model for the Inexhaustible Treasuries, and also their 
practical foundation: one can only repay one's endless karmic debt, 
or one's infinite milk-debt, by drawing on this equally infinite pool of 
redemption, which, in turn, becomes the basis for the actual material 
funds of the monasteries, which are' equally eternal — a pragmatic form 
of communism, in fact, since they were vast pools of wealth collec- 
tively owned and collectively managed: the center of vast projects of 
human cooperation, which were assumed to be similarly eternal. Yet at 
the same time — here I think Gernet is right — this communism became 
the basis, in turn, of something very much like capitalism. The rea- 
son was, above all, the need for constant expansion. Everything — even 
charity — was an opportunity to proselytize; the Dharma had to grow, 
ultimately, to encompass everyone and everything, in order to effect the 
salvation of all living beings. 

The Middle Ages were marked by a general move toward abstraction: 
real gold and silver ended up largely in churches, monasteries, and 
temples, money became virtual again, and at the same time, the ten- 
dency everywhere was to set up overarching moral institutions meant 
to regulate the process and, in particular, to establish certain protec- 
tions for debtors. 

China was unusual in that it was one place where an Axial Age 
empire managed to survive — though at first, only barely. Chinese gov- 
ernments did manage to keep coins in circulation in most places most 
of the time. This was made easier by their reliance exclusively on 
small-denomination coins made of bronze. Even so, it clearly took 
enormous efforts. 

As usual, we don't know a lot about how everyday economic 
transactions took place, but what we do know suggests that in small- 
scale transactions, coins were probably most often used in dealing with 
strangers. As elsewhere, local shopkeepers and merchants extended 
credit. Most accounts seem to have been kept through the use of tally 
sticks, strikingly similar to those used in England, except that rather 
than hazelwood they were usually made of a split piece of notched 
bamboo. Here, too, the creditor took one half, and the debtor held the 



other; they were joined at the moment of repayment, and often broken 
afterward to mark the cancellation of the debt. 48 To what degree were 
they transferable? We don't really know. Most of what we do know is 
from casual references in texts that are mainly about something else: 
anecdotes, jokes, and poetic allusions. The great collection of Taoist 
wisdom, the Leizi, probably written during the Han dynasty, contains 
one such: 

There was a man of Sung who was strolling in the street and 
picked up a half tally someone had lost. He took it home 
and stored it away, and secretly counted the indentations of 
the broken edge. He told a neighbor: "I shall be rich any day 
now." 49 

Rather like someone who finds a key and figures "just as soon as I 
can figure out which lock . . ." 50 Another story tells of how Liu Bang, 
a bibulous local constable and future founder of the Han dynasty, 
used to go on all-night drinking binges, running up enormous tabs. 
Once, while he lay collapsed in a drunken stupor in a wine-shop, the 
owner saw a dragon hovering over his head — a sure sign of future 
greatness — and immediately "broke the tally," forgiving him his ac- 
cumulated drinking debts. 51 

Tallies weren't just used for loans, but for any sort of contract — 
which is why early paper contracts also had to be cut in half and one 
half kept by each party. 52 With paper contracts, there was a definite 
tendency for the creditor's half to function as an IOU and thus be- 
come transferable. By 806 ad, for instance, right around the apogee 
of Chinese Buddhism, merchants moving tea over long distances from 
the far south of the country and officials transporting tax payments to 
the capital, all of them concerned with the dangers of carrying bullion 
over long distances, began to deposit their money with bankers in the 
capital and devised a system of promissory notes. They were called 
"Flying Cash," also divided in half, like tallies, and redeemable for 
cash in their branches in the provinces. They quickly started passing 
from hand to hand and operated something like currency. The govern- 
ment first tried to forbid their use, then a year or two later — and this 
became a familiar pattern in China — when it realized that it could not 
suppress them, switched gears and established a bureau empowered to 
issue such notes themselves. 53 

By the early Song dynasty (960-1279 ad), local banking operations 
all over China were running similar operations, accepting cash and 
bullion for safekeeping and allowing depositors to use their receipts as 



promissory notes, as well as trading in government coupons for salt 
and tea. Many of these notes came to circulate as de facto money. 54 
The government, as usual, first tried to ban the practice, then control 
it (granting a monopoly to sixteen leading merchants), then, finally, set 
up a government monopoly — the Bureau of Exchange Medium, estab- 
lished in 1023 — and before long, aided by the newly invented printing 
press, was operating factories in several cities employing thousands of 
workers and producing literally millions of notes. 55 

At first, this paper money was meant to circulate for a limited time 
(notes would expire after two, then three, then seven years), and was 
redeemable in bullion. Over time, especially as the Song came under 
increasing military pressure, the temptation to simply print money with 
little or no backup became overwhelming — and, moreover, Chinese 
governments were rarely completely willing to accept their own pa- 
per money for tax purposes. Combine this with the fact that the bills 
were worthless outside China, and it's rather surprising that the system 
worked at all. Certainly, inflation was a constant problem and the 
money would have to be recalled and reissued. Occasionally the whole 
system would break down, but then people would resort to their own 
expedients: "privately issued tea checks, noodle checks, bamboo tallies, 
wine tallies, etc." 56 Still, the Mongols, who ruled China from 1271 to 
1368 ad, chose to maintain the system, and it was only abandoned in 
the seventeenth century. 

This is important to note because the conventional account tends 
to represent China's experiment with paper money as a failure, even, 
for Metallists, proof that "fiat money," backed only by state power, 
will always eventually collapse. 57 This is especially odd, since the cen- 
turies when paper money was in use are usually considered the most 
economically dynamic in Chinese history. Surely, if the United States 
government was eventually forced to abandon the use of federal re- 
serve notes in 2400 ad, no one would be arguing that this showed that 
the very idea was always intrinsically unworkable. Nonetheless, the 
main point I'd like to emphasize here is that terms like "fiat money," 
however common, are deceptive. Almost all of the new forms of paper 
money that emerged were not originally created by governments at 
all; they were simply ways of recognizing and expanding the use of 
credit instruments that emerged from everyday economic transactions. 
If it was only China that developed paper money in the Middle Ages, 
this was largely because only in China was there a government large 
and powerful enough, but also, sufficiently suspicious of its mercantile 
classes, to feel it had to take charge of such operations. 



The Near West: 
Islam (Capital as Credit) 

Prices depend on the will of Allah; it is 
he who raises and lowers them. 

— Attributed to the 
Prophet Mohammed 

The profit of each partner must be in 
proportion to the share of each in the 

Islamic legal precept 

For most of the Middle Ages, the economic nerve center of the world 
economy and the source of its most dramatic financial innovations was 
neither China nor India, but the West, which, from the perspective of 
the rest of the world, meant the world of Islam. During most of this 
period, Christendom, lodged in the declining empire of Byzantium and 
the obscure semi-barbarous principalities of Europe, was largely insig- 

Since people who live in Western Europe have so long been in 
the habit of thinking of Islam as the very definition of "the East," 
it's easy to forget that, from the perspective of any other great tradi- 
tion, the difference between Christianity and Islam is almost negligible. 
One need only pick up a book on, say, Medieval Islamic philosophy 
to discover disputes between the Baghdad Aristoteleans and the neo- 
Pythagoreans in Basra, or Persian Neo-Platonists — essentially, scholars 
doing the same work of trying to square the revealed religion tradi- 
tion beginning with Abraham and Moses with the categories of Greek 
philosophy, and doing so in a larger context of mercantile capitalism, 
universalistic missionary religion, scientific rationalism, poetic celebra- 
tions of romantic love, and periodic waves of fascination with mystical 
wisdom from the East. 

From a world-historical perspective, it seems much more sensible 
to see Judaism, Christianity, and Islam as three different manifestations 
of the same great Western intellectual tradition, which for most of 
human history has centered on Mesopotamia and the Levant, extend- 
ing into Europe as far as Greece and into Africa as far as Egypt, and 
sometimes farther west across the Mediterranean or down the Nile. 
Economically, most of Europe was until perhaps the High Middle Ages 



in exactly the same situation as most of Africa: plugged into the larger 
world economy, if at all, largely as an exporter of slaves, raw materials, 
and the occasional exotica (amber, elephant tusks . . .), and importer 
of manufactured goods (Chinese silks and porcelain, Indian calicoes, 
Arab steel). To get a sense of comparative economic development (even 
if the examples are somewhat scattered over time), consider the fol- 
lowing table: 58 

Populations and Tax Revenue, 350 BC-1200 AD 

Population Revenue Revenue 

per Head 

Millions Tons of Silver Grams of Silver 

Persia, c. BC 350 17 697 41 

Egypt, c. BC 200 7 384 55 

Rome, c. 1 AD 50 825 17 

Rome, c. 150 AD 50 1,050 21 

Byzantium, c. 850 AD 10 150 15 

Abbasids, c. 850 AD 26 1,260 48 

T'ang, c. 850 AD 50 2,145 43 

France, 1221 AD 8.5 20.3 2.4 

England, 1203 AD 2.5 11.5 4.6 

What's more, for most of the Middle Ages, Islam was not only the 
core of Western civilization; it was its expansive edge, working its way 
into India, expanding in Africa and Europe, sending missionaries and 
winning converts across the Indian Ocean. 

The prevailing Islamic attitude toward law, government, and eco- 
nomic matters was the exact opposite of that prevalent in China. Con- 
fucians were suspicious of governance through strict codes of law, 
preferring to rely on the inherent sense of justice of the cultivated 
scholar — a scholar who was simply assumed to also be a government 
official. Medieval Islam, on the other hand, enthusiastically embraced 
law, which was seen as a religious institution derived from the Prophet, 
but tended to view government, more often than not, as an unfortunate 
necessity, an institution that the truly pious would do better to avoid. 59 

In part this was because of the peculiar nature of Islamic govern- 
ment. The Arab military leaders who, after Mohammed's death in 
632 ad, conquered the Sassanian empire and established the Abbasid 
Caliphate, always continued to see themselves as people of the desert, 



and never felt entirely part of the urban civilizations they had come 
to rule. This discomfort was never quite overcome — on either side. 
It took the bulk of the population several centuries to convert to the 
conqueror's religion, and even when they did, they never seem to have 
really identified with their rulers. Government was seen as military 
power — necessary, perhaps, defend the faith, but fundamentally exte- 
rior to society. 

In part, too, it was because of the peculiar alliance between mer- 
chants and common folk that came to be aligned against them. After 
Caliph al-Ma'mum's abortive attempt to set up a theocracy in 832 ad, 
the government took a hands-off position on questions of religion. The 
various schools of Islamic law were free to create their own educational 
institutions and maintain their own separate system of religious justice. 
Crucially, it was the ulema, the legal scholars, who were the principal 
agents in the conversion of the bulk of the empire's population to Islam 
in Mesopotamia, Syria, Egypt, and North Africa in those same years. 60 
But — like the elders in charge of guilds, civic associations, commercial 
sodalities, and religious brotherhoods — they did their best to keep the 
government, with its armies and ostentation, at arm's length. 61 "The 
best princes are those who visit religious teachers," one proverb put 
it, "the worst religious teachers are the those who allow themselves to 
be visited by princes." 62 A Medieval Turkish story brings it home even 
more pointedly: 

The king once summoned Nasruddin to court. 

"Tell me," said the king, "you are a mystic, a philosopher, 
a man of unconventional understandings. I have become in- 
terested in the issue of value. It's an interesting philosophical 
question. How does one establish the true worth of a person, 
or an object? Take me for example. If I were to ask you to 
estimate my value, what would you say?" 

"Oh," Nasruddin said, "I'd say about two hundred dinars." 

The emperor was flabbergasted. "What?! But this belt I'm 
wearing is worth two hundred dinars!" 

"I know," said Nasruddin. "Actually, I was taking the value 
of the belt into consideration." 

This disjuncture had profound economic effects. It meant that the 
Caliphate, and later Muslim empires, could operate in many ways 
much like the old Axial Age empires — creating professional armies, 
waging wars of conquest, capturing slaves, melting down loot and 
distributing it in the form of coins to soldiers and officials, demanding 



that those coins be rendered back as taxes — but at the same time, with- 
out having nearly the same effects on ordinary people's lives. 

Over the course of the wars of expansion, for example, enormous 
quantities of gold and silver were indeed looted from palaces, temples, 
and monasteries and stamped into coinage, allowing the Caliphate to 
produce gold dinars and silver dirhams of remarkable purity — that is, 
with next to no fiduciary element, the value of each coin corresponding 
almost precisely to its weight in precious metal. 63 As a result, they were 
able to pay their troops extraordinarily well. A soldier in the Caliph's 
army, for example, received almost four times the wages once received 
by a Roman legionary. 64 We can, perhaps, speak of a kind of "military- 
coinage-slavery" complex here — but it existed in a kind of bubble. 
Wars of expansion, and trade with Europe and Africa, did produce a 
fairly constant flow of slaves, but in dramatic contrast to the ancient 
world, very few of them ended up laboring in farms or workshops. 
Most ended up as decoration in the houses of the rich, or, increasingly 
over time, as soldiers. Over the course of the Abbasid dynasty (750- 
1258 ad) in fact, the empire came to rely, for its military forces, almost 
exclusively on Mamluks, highly trained military slaves captured or 
purchased from the Turkish steppes. The policy of employing slaves as 
soldiers was maintained by all of the Islamic successor states, includ- 
ing the Mughals, and culminated in the famous Mamluk sultanate in 
Egypt in the thirteenth century, but historically, it was unprecedented. 65 
In most times and places slaves are, for obvious reasons, the very last 
people to be allowed anywhere near weapons. Here it was systematic. 
But in a strange way, it also made perfect sense: if slaves are, by defini- 
tion, people who have been severed from society, this was the logical 
consequence of the wall created between society and the Medieval 
Islamic state. 66 

Religious teachers appear to have done everything they could to 
prop up the wall. One reason for the recourse to slave soldiers was their 
tendency to discourage the faithful from serving in the military (since it 
might mean fighting fellow believers). The legal system that they created 
also ensured that it was effectively impossible for Muslims — or for that 
matter Christian or Jewish subjects of the Caliphate — to be reduced to 
slavery. Here al-Wahid seems to have been largely correct. Islamic law 
took aim at just about all the most notorious abuses of earlier, Axial 
Age societies. Slavery through kidnapping, judicial punishment, debt, 
and the exposure or sale of children, even through the voluntary sale 
of one's own person — all were forbidden, or rendered unenforceable. 67 
Likewise with all the other forms of debt peonage that had loomed 
over the heads of poor Middle Eastern farmers and their families 



since the dawn of recorded history. Finally, Islam strictly forbade usu- 
ry, which it interpreted to mean any arrangement in which money 
or a commodity was lent at interest, for any purpose whatsoever. 68 

In a way, one can see the establishment of Islamic courts as the 
ultimate triumph of the patriarchal rebellion that had begun so many 
thousands of years before: of the ethos of the desert or the steppe, 
real or imagined, even as the faithful did their best to keep the heavily 
armed descendants of actual nomads confined to their camps and pal- 
aces. It was made possible by a profound shift in class alliances. The 
great urban civilizations of the Middle East had always been dominat- 
ed by a de facto alliance between administrators and merchants, both 
of whom kept the rest of the population either in debt peonage or in 
constant peril of falling into it. In converting to Islam, the commercial 
classes, so long the arch-villains in the eyes of ordinary farmers and 
townsfolk, effectively agreed to change sides, abandon all their most 
hated practices, and become instead the leaders of a society that now 
defined itself against the state. 

It was possible because from the beginning, Islam had a positive 
view toward commerce. Mohammed himself had begun his adult life as 
a merchant; and no Islamic thinker ever treated the honest pursuit of 
profit as itself intrinsically immoral or inimical to faith. Neither did the 
prohibitions against usury — which for the most part were scrupulously 
enforced, even in the case of commercial loans — in any sense mitigate 
against the growth of commerce, or even the development of complex 
credit instruments. 69 To the contrary, the early centuries of the Caliph- 
ate saw an immediate efflorescence in both. 

Profits were still possible because Islamic jurists were careful to 
allow for certain service fees, and other considerations — notably, al- 
lowing goods bought on credit to be priced slightly higher than those 
bought for cash — that ensured that bankers and traders still had an 
incentive to provide credit services. 70 Still, these incentives were never 
enough to allow banking to become a full-time occupation: instead, 
almost any merchant operating on a sufficiently large scale could be 
expected to combine banking with a host of other moneymaking activi- 
ties. As a result, credit instruments soon became so essential to trade 
that almost anyone of prominence was expected to keep most of his 
or her wealth on deposit, and to make everyday transactions, not by 
counting out coins, but by inkpot and paper. Promissory notes were 
called sakk, "checks", or ruq'a, "notes." Checks could bounce. One 
German historian, picking through a multitude of old Arabic literary 
sources, recounts that: 



About 900 a great man paid a poet in this way, only the banker 
refused the check, so that the disappointed poet composed a 
verse to the effect that he would gladly pay a million on the 
same plan. A patron of the same poet and singer (936) dur- 
ing a concert wrote a check in his favor on a banker for five 
hundred dinars. When paying, the banker gave the poet to un- 
derstand that it was customary to charge one dirham discount 
on each dinar, i.e., about ten per cent. Only if the poet would 
spend the afternoon and evening with him, he would make no 
deduction . . . 

By about 1000 the banker had made himself indispensable in 
Basra: every trader had his banking account, and paid only in 
checks on his bank in the bazaar. . . . 71 

Checks could be countersigned and transferred, and letters of cred- 
it {suftaja) could travel across the Indian Ocean or the Sahara. 72 If they 
did not turn into de facto paper money, it was because, since they oper- 
ated completely independent of the state (they could not be used to pay 
taxes, for instance), their value was based almost entirely on trust and 
reputation. 73 Appeal to the Islamic courts was generally voluntary or 
mediated by merchant guilds and civic associations. In such a context, 
having a famous poet compose verses making fun of you for bouncing 
a check was probably the ultimate disaster. 

When it came to finance, instead of interest-bearing investments, 
the preferred approach was partnerships, where (often) one party 
would supply the capital, the other carry out the enterprise. Instead 
of fixed return, the investor would receive a share of the profits. Even 
labor arrangements were often organized on a profit-sharing basis. 74 
In all such matters, reputation was crucial — in fact, one lively debate 
in early commercial law was over the question of whether reputation 
could (like land, labor, money, or other resources) itself be consid- 
ered a form of capital. It sometimes happened that merchants would 
form partnerships with no capital at all, but only their good names. 
This was called "partnership of good reputation." As one legal scholar 

As for the credit partnership, it is also called the "partnership 
of the penniless" (sharika al-mafalis). It comes about when two 
people form a partnership without any capital in order to buy 
on credit and then sell. It is designated by this name partner- 
ship of good reputations because their capital consists of their 



status and good reputations; for credit is extended only to him 
who has a good reputation among people. 75 

Some legal scholars objected to the idea that such a contract could 
be considered legally binding, since it was not based on an initial out- 
lay of material capital; others considered it legitimate, provided the 
partners make an equitable partition of the profits — since reputation 
cannot be quantified. The remarkable thing here is the tacit recog- 
nition that, in a credit economy that operates largely without state 
mechanisms of enforcement (without police to arrest those who com- 
mit fraud, or bailiffs to seize a debtor's property), a significant part of 
the value of a promissory note is indeed the good name of the signa- 
tory. As Pierre Bourdieu was later to point out in describing a similar 
economy of trust in contemporary Algeria: it's quite possible to turn 
honor into money, almost impossible to convert money into honor. 76 

These networks of trust, in turn, were largely responsible for the 
spread of Islam over the caravan routes of Central Asia and the Sahara, 
and especially across the Indian Ocean, the main conduit of Medieval 
world trade. Over the course of the Middle Ages, the Indian Ocean ef- 
fectively became a Muslim lake. Muslim traders appear to have played 
a key role in establishing the principle that kings and their armies 
should keep their quarrels on dry land; the seas were to be a zone of 
peaceful commerce. At the same time, Islam gained a toehold in trade 
emporia from Aden to the Moluccas because Islamic courts were so 
perfectly suited to provide those functions that made such ports at- 
tractive: means of establishing contracts, recovering debts, creating a 
banking sector capable of redeeming or transferring letters of credit. 77 
The level of trust thereby created between merchants in the great Ma- 
lay entrepot Malacca, gateway to the spice islands of Indonesia, was 
legendary. The city had Swahili, Arab, Egyptian, Ethiopian, and Arme- 
nian quarters, as well as quarters for merchants from different regions 
of India, China, and Southeast Asia. Yet it was said that its merchants 
shunned enforceable contracts, preferring to seal transactions "with a 
handshake and a glance at heaven." 78 

In Islamic society, the merchant became not just a respected figure, 
but a kind of paragon: like the warrior, a man of honor able to pursue 
far-flung adventures; unlike him, able to do so in a fashion damaging 
to no one. The French historian Maurice Lombard draws a striking, 
if perhaps rather idealized, picture of him "in his stately town-house, 
surrounded by slaves and hangers-on, in the midst of his collections of 
books, travel souvenirs, and rare ornaments," along with his ledgers, 
correspondence, and letters of credit, skilled in the arts of double-entry 



book-keeping along with secret codes and ciphers, giving alms to the 
poor, supporting places of worship, perhaps, dedicating himself to the 
writing of poetry, while still able to translate his general creditworthi- 
ness into great capital reserves by appealing to family and partners. 79 
Lombard's picture is to some degree inspired by the famous Thousand 
and One Nights description of Sindbad, who, having spent his youth 
in perilous mercantile ventures to faraway lands, finally retired, rich 
beyond dreams, to spend the rest of his life amidst gardens and dancing 
girls, telling tall tales of his adventures. Here's a glimpse, from the eyes 
of a humble porter (also named Sindbad) when first summoned to see 
him by the master's page: 

He found it to be a goodly mansion, radiant and full of majes- 
ty, till he brought him to a grand sitting room wherein he saw 
a company of nobles and great lords seated at tables garnished 
with all manner of flowers and sweet-scented herbs, besides 
great plenty of dainty viands and fruits dried and fresh and 
confections and wines of the choicest vintages. There also were 
instruments of music and mirth and lovely slave girls playing 
and singing. All the company was ranged according to rank, 
and in the highest place sat a man of worshipful and noble 
aspect whose bearded sides hoariness had stricken, and he was 
stately of stature and fair of favor, agreeable of aspect and 
full of gravity and dignity and majesty. So Sindbad the Porter 
was confounded at that which he beheld and said in himself, 
"By Allah, this must be either some king's palace, or a piece 
of Paradise!" 80 

It's worth quoting not only because it represents a certain ideal, a 
picture of the perfect life, but because there's no real Christian parallel. 
It would be impossible conceive of such an image appearing in, say, a 
Medieval French romance. 

The veneration of the merchant was matched by what can only be 
called the world's first popular free-market ideology. True, one should 
be careful not to confuse ideals with reality. Markets were ever entirely 
independent from the government. Islamic regimes did employ all the 
usual strategies of manipulating tax policy to encourage the growth of 
markets, and they periodically tried to intervene in commercial law. 8 ' 
Still, there was a very strong popular feeling that they shouldn't. Once 
freed from its ancient scourges of debt and slavery, the local bazaar had 
become, for most, not a place of moral danger, but the very opposite: 



the highest expression of the human freedom and communal solidarity, 
and thus to be protected assiduously from state intrusion. 

There was a particular hostility to anything that smacked of price- 
fixing. One much-repeated story held that the Prophet himself had 
refused to force merchants to lower prices during a shortage in the 
city of Medina, on the grounds that doing so would be sacrilegious, 
since, in a free-market situation, "prices depend on the will of God." 82 
Most legal scholars interpreted Mohammed's decision to mean that 
any government interference in market mechanisms should be con- 
sidered similarly sacrilegious, since markets were designed by God to 
regulate themselves. 83 

If all this bears a striking resemblance to Adam Smith's "invisible 
hand" (which was also the hand of Divine Providence), it might not 
be a complete coincidence. In fact, many of the specific arguments and 
examples that Smith uses appear to trace back directly to economic 
tracts written in Medieval Persia. For instance, not only does his argu- 
ment that exchange is a natural outgrowth of human rationality and 
speech already appear both in both Ghazali (1058-1111 ad), and Tusi 
(1201-1274 ad); both use exactly the same illustration: that no one has 
ever observed two dogs exchanging bones. 84 Even more dramatically, 
Smith's most famous example of division of labor, the pin factory, 
where it takes eighteen separate operations to produce one pin, already 
appears in Ghazali's Ihya, in which he describes a needle factory, where 
it takes twenty-five different operations to produce a needle. 85 

The differences, however, are just as significant as the similarities. 
One telling example: like Smith, Tusi begins his treatise on economics 
with a discussion of the division of labor; but where for Smith, the 
division of labor is actually an outgrowth of our "natural propensity to 
truck and barter" in pursuit of individual advantage, for Tusi, it was 
an extension of mutual aid: 

Let us suppose that each individual were required to busy 
himself with providing his own sustenance, clothing, dwelling- 
place and weapons, first acquiring the tools of carpentry and 
the smith's trade, then readying thereby tools and implements 
for sowing and reaping, grinding and kneading, spinning and 
weaving . . . Clearly, he would not be capable of doing justice 
to any one of them. But when men render aid to each other, 
each one performing one of these important tasks that are be- 
yond the measure of his own capacity, and observing the law 
of justice in transactions by giving greatly and receiving in 
exchange of the labor of others, then the means of livelihood 



are realized, and the succession of the individual and the sur- 
vival of the species are assured. 86 

As a result, he argues, divine providence has arranged us to have 
different abilities, desires, and inclinations. The market is simply one 
manifestation of this more general principle of mutual aid, of the 
matching of, abilities (supply) and needs (demand) — or to translate it 
into my own earlier terms, it is not only founded on, but is itself an 
extension of the kind of baseline communism on which any society 
must ultimately rest. 

All this is not to say that Tusi was in any sense a radical egalitar- 
ian. Quite the contrary. "If men were equal," he insists, "they would 
all perish." We need differences between rich and poor, he insisted, just 
as much as we need differences between farmers and carpenters. Still, 
once you start from the initial premise that markets are primarily about 
cooperation rather than competition — and while Muslim economic 
thinkers did recognize and accept the need for market competition, 
they never saw competition as its essence 87 — the moral implications are 
very different. Nasruddin's story about the quail eggs might have been 
a joke, but Muslim ethicists did often enjoin merchants to drive a hard 
bargain with the rich so they could charge less, or pay more, when 
dealing with the less fortunate. 88 

Ghazali's take on the division of labor is similar, and his account 
of the origins of money is if anything even more revealing. It begins 
with what looks much like the myth of barter, except that, like all 
Middle Eastern writers, he starts not with imaginary primitive tribes- 
men, but with strangers meeting in an imaginary marketplace. 

Sometimes a person needs what he does not own and he owns 
what he does not need. For example, a person has saffron but 
needs a camel for transportation and one who owns a camel 
does not presently need that camel but he wants saffron. Thus, 
there is the need for an exchange. However, for there to be an 
exchange, there must be a way to measure the two objects, for 
the camel-owner cannot give the whole camel for a quantity 
of saffron. There is no similarity between saffron and camel 
so that equal amount of that weight and form can be given. 
Likewise is the case of one who desires a house but owns some 
cloth or desires a slave but owns socks, or desires flour but 
possesses a donkey. These goods have no direct proportional- 
ity so one cannot know how much saffron will equal a camel's 
worth. Such barter transactions would be very difficult. 89 



Ghazali also notes that there might also be a problem of one per- 
son not even needing what the other has to offer, but this is almost 
an afterthought; for him, the real problem is conceptual. How do you 
compare two things with no common qualities? His conclusion: it can 
only be done by comparing both to a third thing with no qualities at 
all. For this reason, he explains, God created dinars and dirhams, coins 
made out of gold and silver, two metals that are otherwise no good 
for anything: 

Dirhams and dinars are not created for any particular purpose; 
they are useless by themselves; they are just like stones. They 
are created to circulate from hand to hand, to govern and to 
facilitate transactions. They are symbols to know the value and 
grades of goods. 90 

They can be symbols, units of measure, because of this very lack 
of usefulness, indeed lack of any particular feature other than value: 

A thing can only be exactly linked to other things if it has no 
particular special form or feature of its own — for example, a 
mirror that has no color can reflect all colors. The same is the 
case with money — it has no purpose of its own, but it serves as 
medium for the purpose of exchanging goods. 9 ' 

From this it also follows that lending money at interest must be 
illegitimate, since it means using money as an end in itself: "Money 
is not created to earn money." In fact, he says, "in relation to other 
goods, dirhams and dinars are like prepositions in a sentence," words 
that, as the grammarians inform us, are used to give meaning to other 
words, but can only do because they have no meaning in themselves. 
Money is a thus a unit of measure that provides a means of assessing 
the value of goods, but also one that operates as such only if it stays in 
constant motion. To enter in monetary transactions in order to obtain 
even more money, even if it's a matter of M-C-M', let alone M-M', 
would be, according to Ghazali, the equivalent of kidnapping a post- 
man. 92 

Whereas Ghazali speaks only of gold and silver, what he describes — 
money as symbol, as abstract measure, having no qualities of its own, 
whose value is only maintained by constant motion — is something that 
would never have occurred to anyone were it not in an age when it 
was perfectly normal for money to be employed in purely virtual form. 



Much of our free-market doctrine, then, appears to have been originally 
borrowed piecemeal from a very different social and moral universe. 93 
The mercantile classes of the Medieval Near West had pulled off an ex- 
traordinary feat. By abandoning the usurious practices that had made 
them so obnoxious to their neighbors for untold centuries before, they 
were able to become — alongside religious teachers — the effective lead- 
ers of their communities: communities that are still seen as organized, 
to a large extent, around the twin poles of mosque and bazaar. 94 The 
spread of Islam allowed the market to become a global phenomenon, 
operating largely independent of governments, according to its own 
internal laws. But the very fact that this was, in a certain way, a genu- 
ine free market, not one created by the government and backed by its 
police and prisons — a world of handshake deals and paper promises 
backed only by the integrity of the signer — meant that it could never 
really become the world imagined by those who later adopted many of 
the same ideas and arguments: one of purely self-interested individuals 
vying for material advantage by any means at hand. 

The Far West: 

Christendom (Commerce, Lending, and War) 

Where there is justice in war, there is 
also justice in usury. 

— Saint Ambrose 

Europe, as I mentioned, came rather late to the Middle Ages and for 
most of it was something of a hinterland. Still, the period began much 
as it did elsewhere, with the disappearance of coinage. Money re- 
treated into virtuality. Everyone continued to calculate costs in Roman 
currency, then, later, in Carolingian "imaginary money" — the purely 
conceptual system of pounds, shillings, and pence used across Western 
Europe to keep accounts well into the seventeenth century. 

Local mints did gradually come back into operation, producing 
coins in an endless variety of weight, purity, and denominations. How 
these related to the pan-European system, though, was a matter of 
manipulation. Kings regularly issued decrees revaluing their own coins 
in relation to the money of account, "crying up" the currency by, say, 
declaring that henceforth, one of their ecus or escudos would no longer 
be worth V12 but now '/s of a shilling (thus effectively raising taxes) 
or "crying down" the value of their coins by doing the reverse (thus 



effectively reducing their debts). 95 The real gold or silver content of 
coins was endlessly readjusted, and currencies were frequently called in 
for re-minting. Meanwhile, most everyday transactions dispensed with 
cash entirely, operating through tallies, tokens, ledgers, or transactions 
in kind. As a result, when the Scholastics came to address such matters 
in the thirteenth century, they quickly adopted Aristotle's position that 
money was a mere social convention: that it was, basically, whatever 
human beings decided that it was. 96 

All this fit the broader Medieval pattern: actual gold and silver, 
such of it as was still around, was increasingly laid up in sacred places; 
as centralized states disappeared, the regulation of markets was in- 
creasingly in the hands of the Church. 

At first, the Catholic attitudes toward usury were just as harsh as 
Muslim ones, and attitudes toward merchants, considerably harsher. In 
the first case, they had little choice, as many Biblical texts were quite 
explicit. Consider Exodus 22:25: 

If you lend money to My people, to the poor among you, you 
are not to act as a creditor to him; you shall not charge him 

Both the Psalms (15:5, 54:12) and Prophets (Jeremiah 9.6, Nehemiah 
5:11) were explicit in assigning usurers to death and hellfire. What's more, 
the early Christian Fathers, who laid the foundation of Church teachings 
on social issues in the waning years of the Roman empire, were writing 
amidst the ancient world's last great debt crisis, one that was effec- 
tively in the process of destroying the empire's remaining free peasant- 
ry. 97 While few were willing to condemn slavery, all condemned usury. 

Usury was seen above all as an assault on Christian charity, on 
Jesus's injunction to treat the poor as they would treat the Christ him- 
self, giving without expectation of return and allowing the borrower 
to decide on recompense (Luke 6:34-35). ' n 3^5 ad> for instance, St. 
Basil delivered a sermon on usury in Cappadocia that set the standard 
for such issues: 

The Lord gave His own injunction quite plainly in the words, 
"from him that would borrow of thee turn not thou away." 98 
But what of the money lover? He sees before him a man 
under stress of necessity bent to the ground in supplication. 
He sees him hesitating at no act, no words, of humiliation. He 
sees him suffering undeserved misfortune, but he is merciless. 
He does not reckon that he is a fellow-creature. He does not 



give in to his entreaties. He stands stiff and sour. He is moved 
by no prayers; his resolution is broken by no tears. He persists 
in refusal . . 

That is, until the suppliant mentions "interest." 

Basil was particularly offended by the crass dishonesty by which 
moneylenders operated; their abuse of Christian fellowship. The man 
in need comes seeking a friend, the rich man pretends to be one. In fact 
he's a secret enemy, and everything he says is a lie. Witness, St. Basil 
said, how the rich man will always at first swear mighty oaths that he 
has no money to his name: 

Then the suppliant mentions interest, and utters the word secu- 
rity. All is changed. The frown is relaxed; with a genial smile 
he recalls old family connection. Now it is "my friend." 

"I will see," says he, "if I have any money by me. Yes, 
there is that sum which a man I know has left in my hands on 
deposit for profit. He stipulated a very heavy rate of interest. 
However, I shall certainly take something off, and give it to 
you on better terms." With pretences of this kind and talk like 
this he fawns on the wretched victim, and induces him to swal- 
low the bait. Then he binds him with a written security, adds 
loss of liberty to the trouble of his pressing poverty, and is off. 
The man who has made himself responsible for interest that he 
cannot pay has accepted voluntary slavery for life. 100 

The borrower, coming home with his newfound money, at first 
rejoices. But quickly, "the money slips away," interest accumulates, 
and his possessions are sold off. Basil grows poetic in describing the 
debtor's plight. It's as if time itself has become his enemy. Every day 
and night conspires against him, as they are the parents of interest. His 
life becomes a "sleepless daze of anxious uncertainty," as he is humili- 
ated in public; while at home, he is constantly hiding under the couch 
at every unexpected knock on the door, and can barely sleep, startled 
awake by nightmare visions of his creditor standing over his pillow. 101 

Probably the most famous ancient homily on usury, though, was 
Saint Ambrose's De Tobia, pronounced over several days in Milan in 
380 BC. He reproduces the same vivid details as Basil: fathers forced 
to sell their children, debtors who hanged themselves out of shame. 
Usury, he observes, must be considered a form of violent robbery, even 
murder. 102 Ambrose, though, added one small proviso that was later to 
have enormous influence. His sermon was the first to carefully examine 



every Biblical reference to moneylending, which meant that he had to 
address the one problem later authors always had to struggle with — the 
fact that, in the Old Testament, usury is not quite forbidden to every- 
one. The key sticking point is always Deuteronomy 23:19-20: 

Thou shalt not lend upon usury to thy brother; usury of mon- 
ey, usury of victuals, usury of any thing that is lent upon usury. 

Unto a stranger thou mayest lend upon usury; but unto thy 
brother thou shalt not lend upon usury. 

So who then is this "stranger" or (a better translation of the He- 
brew nokri, "foreigner")? Presumably, one against whom robbery and 
murder would have been justified as well. After all, the ancient Jews 
lived amidst tribes like the Amalekites, on whom God had specifically 
instructed them to make war. If by extracting interest one is, as he puts 
it, fighting without a sword, then it is only legitimate to do so from 
those "whom it would not be a crime to kill." 103 For Ambrose, living in 
Milan, all this was something of a technicality. He included all Chris- 
tians and all those subject to Roman law as "brothers"; there weren't, 
then, lot of Amalekites around. 104 Later, the "Exception of St. Am- 
brose," as it came to be known, was to become extremely important. 

All of these sermons — and there were many of them — left certain 
critical questions unanswered. What should the rich man do when 
receiving a visit from his troubled neighbor? True, Jesus had said to 
give without expectation of return, but it seemed unrealistic to expect 
most Christians to do that. And even if they did, what sort of ongoing 
relationships would that create? St. Basil took the radical position. God 
had given us all things in common, and he had specifically instructed 
the rich to give their possessions to the poor. The communism of 
the Apostles — who pooled all their wealth, and took freely what they 
needed — was thus the only proper model for a truly Christian soci- 
ety. 105 Few of the other Christian Fathers were willing to take things 
this far. Communism was the ideal, but in this fallen and temporary 
world, they argued, it was simply unrealistic. The Church must accept 
existing property arrangements, but also come up with spiritual argu- 
ments to encourage the rich to nonetheless act with Christian charity. 
Many of these employed distinctly commercial metaphors. Even Basil 
was willing to indulge in this sort of thing: 

Whenever you provide for the destitute on account of the Lord, 
it is both a gift and a loan. It is a gift because you entertain no 



hope in recovering it, a loan because of our Lord's munificence 
in paying you back on his behalf, when, having taken a small 
sum for the poor, he will give you back a vast sum in return. 
"For he who takes pity on the poor, lends to God." 106 

Since Christ is in the poor, a gift of charity is a loan to Jesus, to be 
repaid with interest inconceivable on earth. 

Charity, however, is a way of maintaining hierarchy, not under- 
mining it. What Basil is talking about here really has nothing to do 
with debt, and playing with such metaphors seems ultimately to serve 
only to underline the fact that the rich man doesn't owe the poor sup- 
pliant anything, any more than God is in any way legally bound to 
save the soul of anyone who feeds a beggar. "Debt" here dissolves into 
a pure hierarchy (hence, "the Lord") where utterly different beings 
provide each other utterly different kinds of benefit. Later theologians 
were to explicitly confirm this: human beings live in time, noted St. 
Thomas Aquinas, so it makes sense to say that sin is a debt of punish- 
ment we owe to God. But God lives outside of time. By definition, he 
cannot owe anything to anyone. His grace can therefore only be a gift 
given with no obligation. 107 

This, in turn, provides an answer to the question: What are they 
really asking the rich man to do? The Church opposed usury, but it had 
little to say about relations of feudal dependency, where the rich man 
provides charity and the poor suppliant shows his gratitude in other 
ways. Neither, when these kinds of arrangements began to emerge 
across the Christian West, did the Church offer significant objections. 108 
Former debt peons were gradually transformed into serfs or vassals. 
In some ways, the relationship was not much different, since vassalage 
was, in theory, a voluntary, contractual relationship. Just as a Chris- 
tian has to be able to freely choose to submit himself to "the Lord," so 
did a vassal have to agree to make himself someone else's man. All this 
proved perfectly consonant with Christianity. 

Commerce, on the other hand, remained a problem. There was 
not much of a leap between condemning usury as the taking of "what- 
ever exceeds the amount loaned" and condemning any form of profit- 
taking. Many — Saint Ambrose among them — were willing to take that 
leap. Where Mohammed declared that an honest merchant deserved 
a place by the seat of God in heaven, men like Ambrose wondered if 
an "honest merchant" could actually exist. Many held that one simply 
could not be both a merchant and a Christian. 109 In the early Middle 
Ages, this was not a pressing issue — especially since so much commerce 
was conducted by foreigners. The conceptual problems, however, were 



never resolved. What did it mean that one could only lend to "strang- 
ers"? Was it just usury, or was even commerce tantamount to war? 

Probably the most notorious, and often catastrophic, way that this 
problem worked itself out in the High Middle Ages was in relations 
between Christians and Jews. In the years since Nehemiah, Jewish 
attitudes toward lending had themselves changed. In the time of Au- 
gustus, Rabbi Hillel had effectively rendered the sabbatical year a dead 
letter, by allowing two parties to place a rider on any particular loan 
contract agreeing that it would not apply. While both the Torah and 
the Talmud stand opposed to loans on interest, exceptions were made 
in dealing with Gentiles — particularly as, over the course of the elev- 
enth and twelfth centuries, European Jews were excluded from almost 
any other line of work." This in turn made it harder to contain the 
practice, as witnessed in the common joke, current in twelfth-century 
ghettos to justify usury between Jews. It consisted, it is said, of reciting 
Deuteronomy 23:20 in interrogative tones to make it mean the opposite 
of its obvious sense: 'Unto a foreigner thou mayest lend upon usury, 
but unto thy brother thou shalt not lend upon usury?" 11 

On the Christian side, in 1140 ad the "Exception of Saint Ambrose" 
found its way into Gratian's Decretum, which came to be considered 
the definitive collection of canon law. At the time, economic life fell 
very much under the jurisdiction of the Church. While that might ap- 
pear to leave Jews safely outside the system, in reality, matters were 
more complicated. For one thing, while both Jews and Gentiles would 
occasionally attempt to make recourse to the Exception, the prevail- 
ing opinion was that it only really applied to Saracens or others with 
whom Christendom was literally at war. After all, Jews and Christians 
lived in the same towns and villages. If one were to concede that the 
Exception allowed Jews and Christians the right to lend to each other 
at interest, it would also mean that they had the right to murder one 
another." 2 No one really wanted to say that. On the other hand, real 
relations between Christians and Jews often did seem to skate perilous- 
ly close to this unfortunate ideal — though obviously the actual murder 
(apart from mere economic aggression) was all on one side. 

In part this was due to the habit of Christian princes of exploit- 
ing, for their own purposes, the fact that Jews did sit slightly outside 
the system. Many encouraged Jews to operate as moneylenders, under 
their protection, simply because they also knew that protection could 
be withdrawn at any time. The kings of England were notorious in 



this regard. They insisted that Jews be excluded from merchant and 
craft guilds, but granted them the right to charge extravagant rates of 
interest, backing up the loans by the full force of law. 113 Debtors in 
Medieval England were regularly thrown in prisons until their families 
settled with the creditor. 114 Yet the same regularly happened to the 
Jews themselves. In 1210 ad, for example, King John ordered a tallage, 
or emergency levy, to pay for his wars in France and Ireland. Accord- 
ing to one contemporary chronicler "all the Jews throughout England, 
of both sexes, were seized, imprisoned, and tortured severely, in order 
to do the king's will with their money." Most who where put to torture 
offered all they had and more — but on that occasion, one particularly 
wealthy merchant, a certain Abraham of Bristol, who the king decided 
owed him ten thousand marks of silver (a sum equivalent to about a 
sixth of John's total annual revenue), became famous for holding out. 
The king therefore ordered that one of his molars be pulled out daily, 
until he paid. After seven had been extracted, Abraham finally gave 
in. m 

John's successor, Henry III (1216-1272 ad), was in the habit of turn- 
ing over Jewish victims to his brother the Earl of Cornwall, so that, 
as another chronicler put it, "those whom one brother had flayed, the 
other might embowel." 116 Such stories about the extraction of Jewish 
teeth, skin, and intestines are, I think, important to bear in mind when 
thinking about Shakespeare's imaginary Merchant of Venice demand- 
ing his "pound of flesh." 117 It all seems to have been a bit of a guilty 
projection of terrors that Jews had never really visited on Christians, 
but that had been directed the other way around. 

The terror inflicted by kings carried in it a peculiar element of 
identification: the persecutions and appropriations were an extension 
of the logic whereby kings effectively treated debts owed to Jews as ul- 
timately owed to themselves, even setting up a branch of the Treasury 
("the Exchequer of the Jews") to manage them. 118 This was of course 
much in keeping with the popular English impression of their kings 
as themselves a group of rapacious Norman foreigners. But it also 
gave the kings the opportunity to periodically play the populist card, 
dramatically snubbing or humiliating their Jewish financiers, turning 
a blind eye or even encouraging pogroms by townsfolk who chose to 
take the Exception of Saint Ambrose literally, and treat moneylenders 
as enemies of Christ who could be murdered in cold blood. Particularly 
gruesome massacres occurred in Norwich in 1144 ad, and in France, 
in Blois in 1171. Before long, as Norman Cohn put it, "what had once 
been a flourishing Jewish culture had turned into a terrorized society 
locked in perpetual warfare with the greater society around it." 119 



One mustn't exaggerate the Jewish role in lending. Most Jews had 
nothing to do with the business, and those who did were typically bit 
players, making minor loans of grain or cloth for a return in kind. 
Others weren't even really Jews. Already in the 1190s, preachers were 
complaining about lords who would work hand in glove with Christian 
moneylenders claiming they were "our Jews" — and thus under their 
special protection. 120 By the 1100s, most Jewish moneylenders had long 
since been displaced by Lombards (from Northern Italy) and Cahorsins 
(from the French town of Cahors) — who established themselves across 
Western Europe, and became notorious rural usurers. 121 

The rise of rural usury was itself a sign of a growing free peasantry 
(there had been no point in making loans to serfs, since they had noth- 
ing to repossess). It accompanied the rise of commercial farming, urban 
craft guilds, and the "commercial revolution" of the High Middle Ages, 
all of which finally brought Western Europe to a level of economic 
activity comparable to that long since considered normal in other parts 
of the world. The Church quickly came under considerable popular 
pressure to do something about the problem, and at first, it did try to 
tighten the clamps. Existing loopholes in the usury laws were system- 
atically closed, particularly the use of mortgages. These latter began as 
an expedient: as in Medieval Islam, those determined to dodge the law 
could simply present the money, claim to be buying the debtor's house 
or field, and then "rent" it back to the debtor until the principal was 
repaid. In the case of a mortgage, the house was in theory not even 
purchased but pledged as security, but any income from it accrued to 
the lender. In the eleventh century this became a favorite trick of mon- 
asteries. In 1148 it was made illegal: henceforth, all income was to be 
subtracted from the principal. Similarly, in 1187 merchants were forbid- 
den to charge higher prices when selling on credit — the Church thereby 
going much further than any school of Islamic law ever had. In 1179 
usury was made a mortal sin and usurers were excommunicated and 
denied Christian burial. 122 Before long, new orders of itinerant friars 
like the Franciscans and Dominicans organized preaching campaigns, 
traveling town to town, village to village, threatening moneylenders 
with the loss of their eternal souls if they did not make restitution to 
their victims. 

All this was echoed by a heady intellectual debate in the newly 
founded universities, not so much as to whether usury was sinful and 
illegal, but precisely why. Some argued that it was theft of another's 
material possessions; others that it constituted a theft of time, charg- 
ing others for something that belonged only to God. Some held that it 
embodied the sin of Sloth, since like the Confucians, Catholic thinkers 



usually held that a merchant's profit could only be justified as payment 
for his labor (i.e., in transporting goods to wherever they were needed), 
whereas interest accrued even if the lender did nothing at all. Soon the 
rediscovery of Aristotle, who returned in Arabic translation (and the 
influence of Muslim sources like Ghazali and Ibn Sina), added new ar- 
guments: that treating money as an end in itself defied its true purpose; 
that charging interest was unnatural, in that it treated mere metal as if 
it were a living thing that could breed or bear fruit. 123 

But as the Church authorities soon discovered, when one starts 
something like this, it's very hard to keep a lid on it. Soon, new popu- 
lar religious movements were appearing everywhere, and many took up 
the same direction so many had in late Antiquity, not only challeng- 
ing commerce but questioning the very legitimacy of private property. 
Most were labeled heresies and violently suppressed, but many of the 
same arguments were taken up amongst the mendicant orders them- 
selves. By the thirteenth century, the great intellectual debate was be- 
tween the Franciscans and the Dominicans over "apostolic poverty" — 
basically, over whether Christianity could be reconciled with property 
of any sort. 

At the same time, the revival of Roman law — which, as we've seen, 
began from the assumption of absolute private property — put new in- 
tellectual weapons in the hands of those who wished to argue that, at 
least in the case of commercial loans, usury laws should be relaxed. 
The great discovery in this case was the notion of interesse, which is 
where our word "interest" originally comes from: a compensation for 
loss suffered because of late payment. 124 The argument soon became 
that if a merchant made a commercial loan even for some minimal pe- 
riod (say, a month), it was not usurious for him to charge a percentage 
for each month afterward, since this was a penalty, not rental for the 
money, and it was justified as compensation for the profit he would 
have made, had he placed it in some profitable investment, as any mer- 
chant would ordinarily be expected to do. 125 

The reader may be wondering how it could have been possible for 
usury laws to move in two opposite directions simultaneously. The 
answer would seem to be that politically, the situation in Western 
Europe was remarkably chaotic. Most kings were weak, their holdings 
fractured and uncertain; the Continent was a checkerboard of baronies, 
principalities, urban communes, manors, and church estates. Jurisdic- 
tions were constantly being renegotiated — usually by war. Merchant 



capitalism of the sort long familiar in the Muslim Near West only real- 
ly managed to establish itself — quite late, compared with the situation 
in the rest of the Medieval world — when merchant capitalists managed 
to secure a political foothold in the independent city-states of northern 
Italy — most famously, Venice, Florence, Genoa, and Milan — followed 
by the German cities of the Hanseatic League. 126 Italian bankers ulti- 
mately managed to free themselves from the threat of expropriation by 
themselves taking over governments, and by doing so, acquiring their 
own court systems (capable of enforcing contracts) and even more criti- 
cally, their own armies. 127 

What jumps out, in comparison with the Muslim world, are these 
links of finance, trade, and violence. Whereas Persian and Arab think- 
ers assumed that the market emerged as an extension of mutual aid, 
Christians never completely overcame the suspicion that commerce was 
really an extension of usury, a form of fraud only truly legitimate when 
directed against one's mortal enemies. Debt was, indeed, sin — on the 
part of both parties to the transaction. Competition was essential to the 
nature of the market, but competition was (usually) nonviolent war- 
fare. There was a reason why, as I've already observed, the words for 
"truck and barter" in almost all European languages were derived from 
terms meaning "swindle," "bamboozle," or "deceive." Some disdained 
commerce for that reason. Others embraced it. Few would have denied 
that the connection was there. 

One need only examine the way that Islamic credit instruments — 
or for that matter, the Islamic ideal of the merchant adventurer — were 
eventually adopted to see just how intimate this connection really was. 

It is often held that the first pioneers of modern banking were the 
Military Order of the Knights of the Temple of Solomon, commonly 
known as the Knights Templar. A fighting order of monks, they played 
a key role in financing the Crusades. Through the Templars, a lord in 
southern France might take out a mortgage on one of his tenements 
and receive a "draft" (a bill of exchange, modeled on the Muslim suf- 
taja, but written in a secret code) redeemable for cash from the Temple 
in Jerusalem. In other words, Christians appear to have first adopted 
Islamic financial techniques to finance attacks against Islam. 

The Templars lasted from 1118 to 1307, but they finally went the 
way of so many Medieval trading minorities: King Phillip IV, deep 
in debt to the order, turned on them, accusing them of unspeakable 
crimes; their leaders were tortured and ultimately killed, and their 
wealth was expropriated. 128 Much of the problem was that they lacked 
a powerful home base. Italian banking houses such as the Bardi, Pe- 
ruzzi, and Medici did much better. In banking history, the Italians are 



most famous for their complex joint-stock organization and for spear- 
heading the use of Islamic-style bills of exchange. 129 At first these were 
simple enough: basically just a form of long-distance money-changing. 
A merchant could present a certain amount in florins to a banker in 
Italy and receive a notarized bill registering the equivalent in the in- 
ternational money of account (Carolingian derniers), due in, say, three 
months' time, and then after it came due, either he or his agent could 
cash it for an equivalent amount of local currency in the Champagne 
fairs, which were both the great yearly commercial emporia, and great 
financial clearing houses, of the European High Middle Ages. But they 
quickly morphed into a plethora of new, creative forms, mainly a way 
of navigating — or even profiting from — the endlessly complicated Eu- 
ropean currency situation. 130 

Most of the capital for these banking enterprises derived from the 
Mediterranean trade in Indian Ocean spices and Eastern luxuries. Yet 
unlike the Indian Ocean, the Mediterranean was a constant war zone. 
Venetian galleys doubled as both merchant vessels and warships, re- 
plete with cannon and marines, and the differences between trade, cru- 
sade, and piracy often depended on the balance of forces at any given 
moment. 13 ' The same was true on land: where Asian empires tended 
to separate the sphere of warriors and merchants, in Europe they often 

All up and down Central Europe, from Tuscany to Flan- 
ders, from Brabant to Livonia, merchants not only supplied 
warriors — as they did all over Europe — they sat in govern- 
ments that made war and, sometimes, buckled on armor and 
went into battle themselves. Such places make a long list: not 
only Florence, Milan, Venice, and Genoa, but also Augsburg, 
Nuremberg, Strasbourg, and Zurich; not only Liibeck, Ham- 
burg, Bremen, and Danzig, but also Bruges, Ghent, Leiden, and 
Cologne. Some of them — Florence, Nuremberg, Siena, Bern, 
and Ulm come to mind — built considerable territorial states. 132 

The Venetians were only the most famous in this regard. They 
created a veritable mercantile empire over the course of the eleventh 
century, seizing islands like Crete and Cyprus and establishing sugar 
plantations that eventually — anticipating a pattern eventually to be- 
come all too familiar in the New World — came to be staffed largely 
by African slaves. 133 Genoa soon followed suit; one of their most lucra- 
tive businesses was raiding and trading along the Black Sea to acquire 
slaves to sell to the Mamluks in Egypt or to work mines leased from 



the Turks. 134 The Genoese republic was also the inventor of a unique 
mode of military financing, which might be known as war by subscrip- 
tion, whereby those planning expeditions sold shares to investors in 
exchange for the rights to an equivalent percentage of the spoils. It 
was precisely the same galleys, with the same "merchant adventurers" 
aboard, who would eventually pass through the pillars of Hercules to 
follow the Atlantic coast to Flanders or the Champagne fairs, carrying 
cargoes of nutmeg or cayenne, silks and woolen goods — along with the 
inevitable bills of exchange. 135 

It would be instructive, I think, to pause a moment to think about 
this term, "merchant adventurer." Originally it just meant a merchant 
who operated outside his own country. It was around this same time, 
however, at the height of the fairs of Champagne and the Italian mer- 
chant empires, between 1160 and 1172., that the term "adventure" be- 
gan to take on its contemporary meaning. The man most responsible 
for it was the French poet Chretien de Troyes, author of the famous 
Arthurian romances — most famous, perhaps, for being the first to tell 
the story of Sir Percival and the Holy Grail. The romances were a new 
sort of literature featuring a new sort of hero, the "knight-errant," a 
warrior who roamed the world in search of, precisely, "adventure" — in 
the contemporary sense of the word: perilous challenges, love, trea- 
sure, and renown. Stories of knightly adventure quickly became enor- 
mously popular, Chretein was followed by innumerable imitators, and 
the central characters in the stories — Arthur and Guinevere, Lance- 
lot, Gawain, Percival, and the rest — became known to everyone, as 
they are still. This courtly ideal of the gallant knight, the quest, the 
joust, romance and adventure, remains central to our image of the 
Middle Ages. 136 

The curious thing is that it bears almost no relation to reality. 
Nothing remotely like a real "knight-errant" ever existed. "Knights" 
had originally been a term for freelance warriors, drawn from the 
younger or, often, bastard sons of the minor nobility. Unable to in- 
herit, many were forced to band together to seek their fortunes. Many 
became little more than roving bands of thugs, in an endless pursuit 
of plunder — precisely the sort of people who made merchants' lives so 
dangerous. Culminating in the twelfth century, there was a concerted 
effort to bring this dangerous population under the control of the civil 
authorities: not only the code of chivalry, but the tournament, the 
joust — all these were more than anything else ways of keeping them 



out of trouble, as it were, in part by setting knights against each other, 
in part by turning their entire existence into a kind of stylized ritual. 137 
The ideal of the lone wandering knight, in search of some gallant ad- 
venture, on the other hand, seems to have come out of nowhere. 

This is important, since it lies at the very heart of our image of the 
Middle Ages — and the explanation, I think, is revealing. We have to 
recall that merchants had begun to achieve unprecedented social and 
even political power around this time, but that, in dramatic contrast to 
Islam, where a figure like Sindbad — the successful merchant adventurer — 
could serve as a fictional exemplar of the perfect life, merchants, unlike 
warriors, were never seen as paragons of much of anything. 

It's likely no coincidence that Chretien was living in Troyes, at the 
very heartland of the Champagne fairs that had become, in turn, the 
commercial hub of Western Europe. 138 While he appears to have mod- 
eled his vision of Camelot on the elaborate court life under his patron 
Henri the Liberal (1152-1181), Count of Champagne, and his wife Ma- 
rie, daughter of Eleanor of Aquitaine, the real court was staffed by low- 
born commergants, who served as Serjeants of the fairs — leaving most 
real knights in the role of onlookers, guards, or — at tournaments — 

This is not to say that tournaments did not become a kind of 
economic focus in their own right, according to one early twentieth- 
century Medievalist, Amy Kelly: 

The biographer of Guillaume le Marechal gives an idea of how 
this rabble of courtly routiers amused itself on the jousting 
fields of western Europe. To the tournaments, occurring in a 
brisk season about twice a month from Pentecost to the feast of 
St John, flocked the young bloods, sometimes three thousand 
strong, taking possession of the nearest town. Thither also 
flocked horse dealers from Lombardy and Spain, from Brittany 
and the Low Countries, as well as armorers, haberdashers for 
man and beast, usurers, mimes and story-tellers, acrobats, nec- 
romancers, and other gentlemen of the lists, the field, the road. 
Entertainers of every stripe found liberal patronage . . . There 
were feasts in upper chambers, and forges rang in the smithies 
all night long. Brawls with grisly incidents — a cracked skull, a 
gouged eye — occurred as the betting progressed and the dice 
flew. To cry up their champions in the field came ladies of fair 
name and others of no name at all. 

The hazards, the concourse, the prizes, keyed men to the 
pitch of war. The stakes were magnificent, for the victor held 



his prize, horse and man, for ransom. And for these ransoms 
fiefs went in gage or the hapless victim fell into the hands of 
usurers, giving his men, and in extremity, himself, as hostages. 
Fortunes were made and lost on the point of a lance and many 
a mother's son failed to ride home. 139 

So, it was not only that the merchants supplied the materials that 
made the fairs possible; Since vanquished knights technically owed 
their lives to the victors, merchants ended up, in their capacity as 
moneylenders, making good business out of liquidating their assets. 
Alternately, a knight might borrow vast sums to outfit himself in mag- 
nificence, hoping to impress some fair lady (with handsome dowry) 
with his victories; others, to take part in the continual whoring and 
gambling that always surrounded such events. Losers would end up 
having to sell their armor and horses, and this created the danger that 
they would go back to being highwaymen, foment pogroms (if their 
creditors were Jews) or, if they had lands, make new fiscal demands on 
those unfortunate enough to live on them. 

Others turned to war, which itself tended to drive the creation of 
new markets. 140 In one of the most dramatic of such incidents, in No- 
vember 1199, a large number of knights at a tournament at the castle of 
Eery in Champagne, sponsored by Henry's son, Theobald, were seized 
by a great religious passion, abandoned their games, and swore a vow 
to instead retake the Holy Land. The crusader army then proceeded to 
commission the Venetian fleet for transport in exchange for a promise 
of a 50-percent share in all resulting profits. In the end, rather than 
proceeding to the Holy Land, they ended up sacking the (much wealth- 
ier, Orthodox) Christian city of Constantinople after a prolonged and 
bloody siege. A Flemish count named Baldwin was installed as "Latin 
Emperor of Constantinople," but attempting to govern a city that had 
been largely destroyed and stripped of everything of value ensured that 
he and his barons soon ended up in great financial difficulties. In a 
gigantic version of what was happening on the small scale in so many 
tournaments, they were ultimately reduced to stripping the metal off 
the church roofs and auctioning holy relics to pay back their Venetian 
creditors. By 1259, Baldwin had sunk to the point of taking out a mort- 
gage on his own son, who was taken back to Venice as security for 
a loan. 141 

All this does not really answer the question: Whence, then, this 
image of the solitary knight-errant, wandering the forests of a mythic 
Albion, challenging rivals, confronting ogres, fairies, wizards, and mys- 
terious beasts? The answer should be clear by now. Really, this is just a 



sublimated, romanticized image of the traveling merchants themselves: 
men who did, after all, set off on lonely ventures through wilds and 
forests, whose outcome was anything but certain. 142 

And what of the Grail, that mysterious object that all the knights- 
errant were ultimately seeking? Oddly enough, Richard Wagner, com- 
poser of the opera Parzifal, first suggested that the Grail was a sym- 
bol inspired by the new forms of finance. 143 Where earlier epic heroes 
sought after, and fought over, piles of real, concrete gold and silver — 
the Nibelung's hoard — these new ones, born of the new commercial 
economy, pursued purely abstract forms of value. No one, after all, 
knew precisely what the Grail was. Even the epics disagree: sometimes 
it's a plate, sometimes a cup, sometimes a stone. (Wolfram von Eschen- 
bach imagined it to be a jewel knocked from Lucifer's helmet in a bat- 
tle at the dawn of time.) In a way it doesn't matter. The point is that 
it's invisible, intangible, but at the same time of infinite, inexhaustible 
value, containing everything, capable of making the wasteland flower, 
feeding the world, providing spiritual sustenance, and healing wounded 
bodies. Marc Shell even suggested that it would best be conceived as a 
blank check, the ultimate financial abstraction. 144 

What, Then, Were the Middle Ages? 

Each of us is a mere symbolon of a 
man, the result of bisection, like the 
flat fish, two out of one, and each of 
us is constantly searching for his corre- 
sponding symbolon. 

— Plato, The Symposium 

There is one way that Wagner got it wrong: the introduction of finan- 
cial abstraction was not a sign that Europe was leaving the Middle 
Ages, but that it was finally, belatedly, entering it. 

Wagner's not really to blame here. Almost everyone gets this 
wrong, because the most characteristic Medieval institutions and ideas 
arrived so late in Europe that we tend to mistake them for the first 
stirrings of modernity. We've already seen this with bills of exchange, 
already in use in the East by 700 or 800 ad, but only reaching Europe 
several centuries later. The independent university — perhaps the quint- 
essential Medieval institution — is another case in point. Nalanda was 
founded in 42.7 ad, and there were independent institutions of higher 



learning all over China and the Near West (from Cairo to Constanti- 
nople) centuries before the creation of similar institutions in Oxford, 
Paris, and Bologna. 

If the Axial Age was the age of materialism, the Middle Ages were 
above all else the age of transcendence. The collapse of the ancient em- 
pires did not, for the most part, lead to the rise of new ones. 145 Instead, 
once-subversive popular religious movements were catapulted into the 
status of dominant institutions. Slavery declined or disappeared, as did 
the overall level of violence. As trade picked up, so did the pace of 
technological innovation; greater peace brought greater possibilities not 
only for the movement of silks and spices, but also of people and ideas. 
The fact that monks in Medieval China could devote themselves to 
translating ancient treatises in Sanskrit, and that students in madrasas 
in Medieval Indonesia could debate legal terms in Arabic, is testimony 
to the profound cosmopolitanism of the age. 

Our image of the Middle Ages as an "age of faith" — and hence, of 
blind obedience to authority — is a legacy of the French Enlightenment. 
Again, it makes sense only if you think of the "Middle Ages" as some- 
thing that happened primarily in Europe. Not only was the Far West an 
unusually violent place by world standards, the Catholic Church was 
extraordinarily intolerant. It's hard to find many Medieval Chinese, 
Indian, or Islamic parallels, for example, to the burning of "witches" or 
the massacre of heretics. More typical was the pattern that prevailed in 
certain periods of Chinese history, when it was perfectly acceptable for 
a scholar to dabble in Taoism in his youth, become a Confucian in mid- 
dle age, then become a Buddhist on retirement. If there is an essence to 
Medieval thought, it lies not in blind obedience to authority, but rather 
in a dogged insistence that the values that govern our ordinary daily 
affairs — particularly those of the court and marketplace — are confused, 
mistaken, illusory, or perverse. True value lay elsewhere, in a domain 
that cannot be directly perceived, but only approached through study 
or contemplation. But this in turn made the faculties of contemplation, 
and the entire question of knowledge, an endless problem. Consider 
for example the great conundrum, pondered by Muslim, Christian, and 
Jewish philosophers alike: What does it mean to simultaneously say 
that we can only know God through our faculties of Reason, but that 
Reason itself partakes of God? Chinese philosophers were struggling 
with similar conundrums when they asked, "Do we read the classics or 
do the classics read us?" Almost all the great intellectual debates of the 
age turned on this question in one way or another. Is the world created 
by our minds, or our minds by the world? 



We can see the same tensions within predominant theories of mon- 
ey. Aristotle had argued that gold and silver had no intrinsic value in 
themselves, and that money therefore was just a social convention, 
invented by human communities to facilitate exchange. Since it had 
"come about by agreement, therefore it is within our power to change 
it or render it useless" if we all decide that that's what we want to 
do. 146 This position gained little traction in the materialist intellectual 
environment of the Axial Age, but by the later Middle Ages, it had 
become standard wisdom. Ghazali was among the first to embrace it. 
In his own way he took it even further, insisting that the fact that a 
gold coin has no intrinsic value is the basis of its value as money, since 
this very lack of intrinsic value is what allows it to "govern," measure, 
and regulate the value of other things. But at the same time, Ghazali 
denied that money was a social convention. It was given us by God. 147 

Ghazali was a mystic, and a political conservative, so one might 
argue that he ultimately shied away from the most radical implications 
of his own ideas. But one could also ask whether, in the Middle Ages, 
arguing that money was an arbitrary social convention was really all 
that radical a position. After all, when Christian and Chinese think- 
ers insisted that it was, it was almost always as a way of saying that 
money is whatever the king or the emperor wished it to be. In that 
sense, Ghazali's position was perfectly consonant with the Islamic de- 
sire to protect the market from political interference by saying that it 
fell properly under the aegis of religious authorities. 

I I I I I 

The fact that Medieval money took such abstract, virtual forms — 
checks, tallies, paper money — meant that questions like these ("What 
does it mean to say that money is a symbol?") cut to the core of the 
philosophical issues of the day. Nowhere is this so true as in the his- 
tory of the word "symbol" itself. Here we encounter some parallels so 
extraordinary that they can only be described as startling. 

When Aristotle argued that coins are merely social conventions, 
the term he used was symbolon — from which our own word "symbol" 
is derived. Symbolon was originally the Greek word for "tally" — an 
object broken in half to mark a contract or agreement, or marked and 
broken to record a debt. So our word "symbol" traces back originally 
to objects broken to record debt contracts of one sort or another. 
This is striking enough. What's really, remarkable, though, is that the 
contemporary Chinese word for "symbol," fu, or fu bao, has almost 
exactly the same origin. 148 



Let's start with the Greek term "symbolon." Two friends at dinner 
might create a symbolon if they took some object — a ring, a knuckle- 
bone, a piece of crockery — and broke it in half. Any time in the future 
when either of them had need of the other's help, they could bring 
their halves as reminders of the friendship. Archeologists have found 
hundreds of little broken friendship tablets of this sort in Athens, often 
made of clay. Later they became ways of sealing a contract, the ob- 
ject standing in the place of witnesses. 149 The word was also used for 
tokens of every sort: those given to Athenian jurors entitling them to 
vote, or tickets for admission to the theater. It could be used refer to 
money too, but only if that money had no intrinsic value: bronze coins 
whose value was fixed only by local convention. 150 Used for written 
documents, a symbolon could also be passport, contract, commission, 
or receipt. By extension, it came to mean: omen, portent, symptom, or 
finally, in the now-familiar sense, symbol. 

The path to the latter appears to have been twofold. Aristotle fixed 
on the fact that a tally could be anything: what the object was didn't 
matter; all that mattered was that there was a way to break it in half. 
It is exactly so with language: words are sounds we use to refer to ob- 
jects, or to ideas, but the relation is arbitrary: there's no particular rea- 
son, for example, that English-speakers should choose "dog" to refer 
to an animal and "god" to refer to a deity, rather than the other way 
around. The only reason is social convention: an agreement between all 
speakers of a language that this sound shall refer to that thing. In this 
sense, all words were arbitrary tokens of agreement. 151 So, of course, is 
money — for Aristotle, not only worthless bronze coins that we agree to 
treat as if they were worth a certain amount, but all money, even gold, 
is just a symbolon, a social convention." 2 

All this came to seem almost commonsensical in the thirteenth 
century of Thomas Aquinas, when rulers could change the value of 
currency simply by issuing a decree. Still, Medieval theories of symbols 
derived less from Aristotle than from the Mystery Religions of Antiq- 
uity, where "symbolon" came to refer to certain cryptic formulae or 
talismans that only initiates could understand. 153 It thus came to mean 
a concrete token, perceptible to the senses, that could only be under- 
stood in reference to some hidden reality entirely beyond the domain 
of sensory experience. 154 

The theorist of the symbol whose work was most widely read 
and respected in the Middle Ages was a sixth-century Greek Christian 
mystic whose real name has been lost to history, but who is known 
by his pseudonym Dionysius the Areopagite. 155 Dionysius took up the 
notion in this latter sense to confront what was to become the great 



intellectual problem of the age: How is it possible for humans to have 
knowledge of God? How can we, whose knowledge is confined to what 
our senses can perceive of the material universe, have knowledge of a 
being whose nature is absolutely alien to that material universe — "that 
infinity beyond being," as he puts it, "that oneness that is beyond intel- 
ligence"?' 56 It would be impossible were it not for the fact that God, 
being all-powerful, can do anything, and therefore, just as he places 
his own body in the Eucharist, so can he reveal himself to our minds 
through an endless variety of material shapes. Intriguingly, Dionysius 
warns us that we cannot begin to understand how symbols work until 
we rid ourselves of the notion that divine things are likely to be beauti- 
ful. Images of luminous angels and celestial chariots are only likely to 
confuse us, since we will be tempted to imagine that that's what heaven 
is actually like, and in fact we cannot possibly conceive of what heaven 
is like. Instead, effective symbols are, like the original symbolon, home- 
ly objects selected apparently at random; often, ugly, ridiculous things, 
whose very incongruity reminds us that they are not God; of the fact 
that God "transcends all materiality," even as, in another sense, they 
are God.' 57 But the notion that they are in any sense tokens of agree- 
ment between equals is gone entirely. Symbols are gifts, absolute, free, 
hierarchical gifts, presented by a being so far above us that any thought 
of reciprocity, debt, or mutual obligation is simply inconceivable. 158 

Compare the Greek dictionary above to the following, from a Chi- 
nese dictionary: 

FU. To agree with, to tally. The two halves of a tally. 

• evidence; proof of identity, credentials 

• to fulfill a promise, to keep one's word 

• to reconcile 

• the mutual agreement between Heaven's appointment 
and human affairs 

• a tally, a check 

• an imperial seal or stamp 

• a warrant, a commission, credentials 

• like fitting the two halves of a tally, in exact agreement 

• a symbol, a sign . . .'" 

The evolution is almost exactly the same. Like symbola, fu can be 
tallies, contracts, official seals, warrants, passports, or credentials. As 
promises, they can embody an agreement, a debt contract, or even a 
relation of feudal vassalage — since a minor lord agreeing to become 



another man's vassal would split a tally just as he would if borrowing 
grain or money. The common feature seems to be a contract between 
two parties that begin as equal, in which one agrees to become subordi- 
nate. Later, as the state became more centralized, we mainly hear about 
fu presented to officials as a means of conveying order: the official 
would take the left half with him when posted to the provinces, and 
when the emperor wished to send an important command, he would 
send the right half with the messenger to make sure that the official 
knew it was actually the imperial will. 160 

We've already seen how paper money seems to have developed 
from paper versions of such debt contracts, ripped in half and reunited. 
For Chinese theorists, of course, Aristotle's argument that money was 
simply a social convention was hardly radical; it was simply assumed. 
Money was whatever the emperor established it to be. Though even 
here there was a slight proviso, as evidenced in the entry above, that 
"fu" could also refer to "the mutual agreement between heaven's ap- 
pointment and human affairs." Just as officials were appointed by the 
emperor, the emperor was ultimately appointed by a higher power, and 
he could only rule effectively as long as he kept its mandate, which is 
why propitious omens were called "fu," signs that heaven approved of 
the ruler, just as natural disasters were a sign that he had strayed. 161 

Here Chinese ideas did grow a bit closer to the Christian ones. But 
Chinese conceptions of the cosmos had one crucial difference: since there 
was no emphasis on the absolute gulf between our world and the one be- 
yond it, contractual relations with the gods were by no means out of the 
question. This was particularly true in Medieval Taoism, where monks 
were ordained through a ceremony called "rending the tally," ripping 
apart a piece of paper that represented a contract with heaven. 162 It was 
the same with the magical talismans, also called "fu," which an adept 
might receive from his master. These were literally tallies: the adept kept 
one; the other half was said to be retained by the gods. Such talismanic 
fu took the form of diagrams, said to represent a form of celestial writ- 
ing, comprehensible only to the gods, which committed them to assist the 
bearer, often giving the adept the right to call on armies of divine protec- 
tors with whose help he could slay demons, cure the sick, or otherwise 
attain miraculous powers. But they could also become, like Dionysius' 
symbola, objects of contemplation, by which one's mind can ultimately 
attain some knowledge of the invisible world beyond our own. 163 

Many of the most compelling visual symbols to emerge from Me- 
dieval China trace back to such talismans: the River Symbol, or, for 
that matter, the yin-yang symbol that seems to have developed out of 
it. 164 Just looking at a yin-yang symbol, it is easy enough to imagine 



the left and right (sometimes, too, called "male" and "female") halves 
of a tally. 

A tally does away with the need for witnesses; if the two surfaces agree, 
then everyone knows that the agreement between the contracting par- 
ties exists as well. This is why Aristotle saw it as a fit metaphor for 
words: word A corresponds to concept B because there is a tacit agree- 
ment that we shall act as if it does. The striking thing about tallies is 
that even though they might begin as simple tokens of friendship and 
solidarity, in almost all the later examples, what the two parties actu- 
ally agree to create is a relation of inequality: of debt, obligation, sub- 
ordination to another's orders. This is in turn what makes it possible 
to use the metaphor for the relation between the material world and 
that more powerful world that ultimately gives it meaning. The two 
sides are the same. Yet what they create is absolute difference. Hence 
for a Medieval Christian mystic, as for Medieval Chinese magicians, 
symbols could be literal fragments of heaven — even if for the first, they 
provided a language whereby one could have some understanding of 
beings one could not possibly interact with; while for the second, they 
provided a way of interacting, even making practical arrangements, 
with beings whose language one could not possibly understand. 

On one level, this is just another version of the dilemmas that 
always arise when we try to reimagine the world through debt — that 
peculiar agreement between two equals that they shall no longer be 
equals, until such time as they become equals once again. Still, the 
problem took on a peculiar piquancy in the Middle Ages, when the 
economy became, as it were, spiritualized. As gold and silver migrated 
to holy places, ordinary transactions everywhere came to be carried out 
primarily through credit. Inevitably, arguments about wealth and mar- 
kets became arguments about debt and morality, and arguments about 
debt and morality became arguments about the nature of our place in 
the universe. As we've seen, the solutions varied considerably. Europe 
and India saw a return to hierarchy: society became a ranked order 
of Priests, Warriors, Merchants, and Farmers (or in Christendom, just 
Priests, Warriors, and Farmers). Debts between the orders were con- 
sidered threatening because they implied the potential of equality, and 
they often led to outright violence. In China, in contrast, the principle 
of debt often became the governing principle of the cosmos: karmic 
debts, milk-debts, debt contracts between human beings and celestial 
powers. From the point of view of the authorities, all these led to 



excess, and potentially to vast concentrations of capital that might 
throw the entire social order out of balance. It was the responsibility of 
government to intervene constantly to keep markets running smoothly 
and equitably, thus avoiding new outbreaks of popular unrest. In the 
world of Islam, where theologians held that God recreated the en- 
tire universe at every instant, market fluctuations were instead seen as 
merely another manifestation of divine will. 

The striking thing is that the Confucian condemnation of the mer- 
chant, and the Islamic celebration of the merchant, ultimately led to the 
same thing: prosperous societies with flourishing markets, but where 
the elements never came together to create the great merchant banks 
and industrial firms that were to become the hallmark of modern capi- 
talism. It's especially striking in the case of Islam. Certainly, the Islamic 
world produced figures who would be hard to describe as anything 
but capitalists. Large-scale merchants were referred to as sahib al-mal, 
"owners of capital," and legal theorists spoke freely about the creation 
and expansion of capital funds. At the height of the Caliphate, some 
of these merchants were in possession of millions of dinars and seeking 
profitable investment. Why did nothing like modern capitalism emerge? 
I would highlight two factors. First, Islamic merchants appear to have 
taken their free-market ideology seriously. The marketplace did not 
fall under the direct supervision of the government; contracts were 
made between individuals — ideally, "with a handshake and a glance at 
heaven" — and thus honor and credit became largely indistinguishable. 
This is inevitable: you can't have cutthroat competition where there 
is no one stopping people from literally cutting one another's throats. 
Second, Islam also took seriously the principle, later enshrined in clas- 
sical economic theory but only unevenly observed in practice, that 
profits are the reward for risk. Trading enterprises were assumed to 
be, quite literally, adventures, in which traders exposed themselves to 
the dangers of storm and shipwreck, savage nomads, forests, steppes, 
and deserts, exotic and unpredictable foreign customs, and arbitrary 
governments. Financial mechanisms designed to avoid these risks were 
considered impious. This was one of the objections to usury: if one 
demands a fixed rate of interest, the profits are guaranteed. Similarly, 
commercial investors were expected to share the risk. This made most 
of the forms of finance and insurance that were to later develop in 
Europe impossible. 165 

In this sense the Buddhist monasteries of early Medieval China 
represent the opposite extreme. The Inexhaustible Treasuries were in- 
exhaustible because, by continually lending their money out at inter- 
est and never otherwise touching their capital, they could guarantee 



effectively risk-free investments. That was the entire point. By doing so, 
Buddhism, unlike Islam, produced something very much like what we 
now call "corporations" — entities that, through a charming legal fic- 
tion, we imagine to be persons, just like human beings, but immortal, 
never having to go through all the human untidiness of marriage, re- 
production, infirmity, and death. To put it in properly Medieval terms, 
they are very much like angels. 

Legally, our notion of the corporation is very much a product of 
the European High Middle Ages. The legal idea of a corporation as a 
"fictive person" {persona ficta) — a person who, as Maitland, the great 
British legal historian, put it, "is immortal, who sues and is sued, who 
holds lands, has a seal of his own, who makes regulations for those 
natural persons of whom he is composed" 166 — was first established in 
canon law by Pope Innocent IV in 1250 ad, and one of the first kinds of 
entities it applied to were monasteries — as also to universities, church- 
es, municipalities, and guilds. 167 

The idea of the corporation as an angelic being is not mine, inci- 
dentally. I borrowed it from the great Medievalist Ernst Kantorowicz, 
who pointed out that all this was happening right around the same 
time that Thomas Aquinas was developing the notion that angels were 
really just the personification of Platonic Ideas. 168 "According to the 
teachings of Aquinas," he notes, "every angel represented a species." 

Little wonder then that finally the personified collectives of 
the jurists, which were juristically immortal species, displayed 
all the features otherwise attributed to angels . . . The jurists 
themselves recognized that there was some similarity between 
their abstractions and the angelic beings. In this respect, it may 
be said that the political and legal world of thought of the later 
Middle Ages began to be populated by immaterial angelic bod- 
ies, large and small: they were invisible, ageless, sempiternal, 
immortal, and sometimes even ubiquitous; and they were en- 
dowed with a corpus intellectuale or mysticum [an intellectual 
or mystical body] which could stand any comparison with the 
"spiritual bodies" of the celestial beings. 169 

All this is worth emphasizing because while we are used to assum- 
ing that there's something natural or inevitable about the existence of 
corporations, in historical terms, they are actually strange, exotic crea- 
tures. No other great tradition came up with anything like it. 170 They 
are the most peculiarly European addition to that endless proliferation 



of metaphysical entities so characteristic of the Middle Ages — as well 
as the most enduring. 

They have, of course, changed a great deal over time. Medieval cor- 
porations owned property, and they often engaged in complex financial 
arrangements, but in no case were they profit-seeking enterprises in the 
modern sense. The ones that came closest were, perhaps unsurpris- 
ingly, monastic orders — above all, the Cistercians — whose monaster- 
ies became something like the Chinese Buddhist ones, surrounded by 
mills and smithies, practicing rationalized commercial agriculture with 
a workforce of "lay brothers" who were effectively wage laborers, 
spinning and exporting wool. Some even talk about "monastic capi- 
talism." 171 Still, the ground was only really prepared for capitalism in 
the familiar sense of the term when the merchants began to organize 
themselves into eternal bodies as a way to win monopolies, legal or de 
facto, and avoid the ordinary risks of trade. An excellent case in point 
was the Society of Merchant Adventurers, charted by King Henry IV 
in London in 1407, who, despite the romantic-sounding name, were 
mainly in the business of buying up British woolens and selling them 
in the Flanders fairs. They were not a modern joint-stock company, 
but a rather old-fashioned Medieval merchant guild, but they provided 
a structure whereby older, more substantial merchants could simply 
provide loans to younger ones, and they managed to secure enough of 
an exclusive control over the woolen trade that substantial profits were 
pretty much guaranteed. 172 When such companies began to engage in 
armed ventures overseas, though, a new era of human history might be 
said to have begun. 

Chapter Eleven 



"Eleven pesos, then; and as you can't 
pay me the eleven pesos, that makes an- 
other eleven pesos — twenty-two in all: 
eleven for the serape and the petate and 
eleven because you can't pay. Is that 
right, CrisieroV 

Crisiero had no knowledge of fig- 
ures, so it was very natural that he 
said, "That is right, patron." 

Don Arnulfo was a decent, honor- 
able man. Other landowners were a good 
deal less softhearted with their peons. 

"The shirt is five pesos. Right? 
Very well. And as you can't pay for it, 
that's five pesos. And as you remain in 
my debt for the five pesos, that's five 
pesos. And as 1 shall never have the 
money from you, that's five pesos. So 
that makes five and five and five and 
five. That's twenty pesos. Agreed}" 

"Yes, patron, agreed." 

The peon can get the shirt no- 
where else when he needs one. He 
can get credit nowhere but from his 
master, for whom he works and from 
whom he can never get away as long 
as he owes him a centavo. 

— B. Traven, The Carreta 



THE EPOCH THAT BEGAN with what we're used to calling the "Age 
of Exploration" was marked by so many things that were genuinely 
new — the rise of modern science, capitalism, humanism, the nation- 
state — that it may seem odd to frame it as just another turn of an 
historical cycle. Still, from the perspective I've been developing in this 
book, that is what it was. 

The era begins around 1450 with a turn away from virtual curren- 
cies and credit economies and back to gold and silver. The subsequent 
flow of bullion from the Americas sped the process immensely, spark- 
ing a "price revolution" in Western Europe that turned traditional 
society upside-down. What's more, the return to bullion was accompa- 
nied by the return of a whole host of other conditions that, during the 
Middle Ages, had been largely suppressed or kept at bay: vast empires 
and professional armies, massive predatory warfare, untrammeled usu- 
ry and debt peonage, but also materialist philosophies, a new burst of 
scientific and philosophical creativity — even the return of chattel slav- 
ery. It was in no way a simple repeat performance. All the Axial Age 
pieces reappeared, but they came together in an entirely different way. 

The 1400s are a peculiar period in European history. It was a century 
of endless catastrophe: large cities were regularly decimated by the 
Black Death; the commercial economy sagged and in some regions col- 
lapsed entirely; whole cities went bankrupt, defaulting on their bonds; 
the knightly classes squabbled over the remnants, leaving much of 
the countryside devastated by endemic warfare. Even in geopolitical 
terms Christendom was staggering, with the Ottoman Empire not only 
scooping up what remained of Byzantium but pushing steadily into 
central Europe, its forces expanding on land and sea. 

At the same time, from the perspective of many ordinary farmers 
and urban laborers, times couldn't have been much better. One of the 
perverse effects of the bubonic plague, which killed off about one-third 
of the European workforce, was that wages increased dramatically. It 
didn't happen immediately, but this was largely because the first reac- 
tion of the authorities was to enact legislation freezing wages, or even 
attempting to tie free peasants back to the land again. Such efforts were 
met with powerful resistance, culminating in a series of popular upris- 
ings across Europe. These were squelched, but the authorities were also 
forced to compromise. Before long, so much wealth was flowing into 
the hands of ordinary people that governments had to start introducing 



new laws forbidding the lowborn to wear silks and ermine, and to limit 
the number of feast days, which, in many towns and parishes, began 
eating up one-third or even half of the year. The fifteenth century is, in 
fact, considered the heyday of Medieval festive life, with its floats and 
dragons, maypoles and church ales, its Abbots of Unreason and Lords 
of Misrule.' 

Over the next centuries, all this was to be destroyed. In England, 
the festive life was systematically attacked by Puritan reformers; then 
eventually by reformers everywhere, Catholic and Protestant alike. At 
the same time its economic basis in popular prosperity dissolved. 

Why this happened has been a matter of intense historical debate 
for centuries. This much we know: it began with a massive inflation. 
Between 1500 and 1650, for instance, prices in England increased 500 
percent, but wages rose much more slowly, so that in five generations, 
real wages fell to perhaps 40 percent of what they had been. The same 
thing happened everywhere in Europe. 

Why? The favorite explanation, ever since a French lawyer named 
Jean Bodin first proposed it in 1568, was the vast influx of gold and 
silver that came pouring into Europe after the conquest of the New 
World. As the value of precious metals collapsed, the argument went, 
the price of everything else skyrocketed, and wages simply couldn't 
keep up. 2 There is some evidence to support this. The height of popular 
prosperity around 1450 did correspond to a period when bullion — and 
therefore, coin — was in particularly short supply. 3 The lack of cash 
played havoc with international trade in particular; in the 1460s, we 
hear of ships full of wares forced to turn back from major ports, as no 
one had any cash on hand to buy from them. The problem only started 
to turn around later in the decade, with a sudden burst of silver mining 
in Saxony and the Tirol, followed by the opening of new sea routes to 
the Gold Coast of West Africa. Then came the conquests of Cortes and 
Pizarro. Between 1520 and 1640, untold tons of gold and silver from 
Mexico and Peru were transported across the Atlantic and Pacific in 
Spanish treasure ships. 

The problem with the conventional story is that very little of that 
gold and silver lingered very long in Europe. Most of the gold ended 
up in temples in India, and the overwhelming majority of the silver 
bullion was ultimately shipped off to China. The latter is crucial. If we 
really want to understand the origins of the modern world economy, 
the place to start is not in Europe at all. The real story is of how China 
abandoned the use of paper money. It's a story worth telling briefly, 
because very few people know it. 



After the Mongols conquered China in 1271, they kept the system of 
paper money in place, and even made occasional (if usually disastrous) 
attempts to introduce it in the other parts of their empire. In 1368, 
however, they were overthrown by another of China's great popular 
insurrections, and a former peasant leader was once again installed 
in power. 

During their century of rule, the Mongols had worked closely with 
foreign merchants, who became widely detested. Partly as a result, the 
former rebels, now the Ming dynasty, were suspicious of commerce in 
any form, and they promoted a romantic vision of self-sufficient agrar- 
ian communities. This had some unfortunate consequences. For one 
thing, it meant the maintenance of the old Mongol tax system, paid in 
labor and in kind; especially since that, in turn, was based on a quasi- 
caste system in which subjects were registered as farmers, craftsmen, 
or soldiers and forbidden to change their jobs. This proved extraordi- 
narily unpopular. While government investment in agriculture, roads, 
and canals did set off a commercial boom, much of this commerce was 
technically illegal, and taxes on crops were so high that many indebted 
farmers began to flee their ancestral lands. 4 

Typically, such floating populations can be expected to seek just 
about anything but regular industrial employment; here as in Europe, 
most preferred a combination of odd jobs, peddling, entertainment, 
piracy, or banditry. In China, many also turned prospector. There 
was a minor silver rush, with illegal mines cropping up everywhere. 
Uncoined silver ingots, instead of official paper money and strings of 
bronze coins, soon became the real money of the off-the-books infor- 
mal economy. When the government attempted to shut down illegal 
mines in the 1430s and 1440s, their efforts sparked local insurrections, 
in which miners would make common cause with displaced peasants, 
seize nearby cities, and sometimes threaten entire provinces. 5 

In the end, the government gave up even trying to suppress the 
informal economy. Instead, they swung the other way entirely: stopped 
issuing paper money, legalized the mines, allowed silver bullion to 
become the recognized currency for large transactions, and even gave 
private mints the authority to produce strings of cash. 6 This, in turn, 
allowed the government to gradually abandon the system of labor ex- 
actions and substitute a uniform tax system payable in silver. 

Effectively, the Chinese government had gone back to its old policy 
of encouraging markets and merely intervening to prevent any undue 
concentrations of capital. It quickly proved spectacularly successful, 



and Chinese markets boomed. Indeed, many speak of the Ming as 
having accomplished something almost unique in world history: this 
was a time when the Chinese population was exploding, but living 
standards markedly improved. 7 The problem was that the new policy 
meant that the regime had to ensure an abundant supply of silver in 
the country, so as to keep its price low and minimize popular unrest — 
but as it turned out, the Chinese mines were very quickly exhausted. 
In the 1530s, new silver mines were discovered in Japan, but these were 
exhausted in a decade or two as well. Before long, China had to turn 
to Europe and the New World. 

Now, since Roman times, Europe had been exporting gold and 
silver to the East: the problem was that Europe had never produced 
much of anything that Asians wanted to buy, so it was forced to pay 
in specie for silks, spices, steel, and other imports. The early years of 
European expansion were largely attempts to gain access either to East- 
ern luxuries or to new sources of gold and silver with which to pay for 
them. In those early days, Atlantic Europe really had only one substan- 
tial advantage over its Muslim rivals: an active and advanced tradition 
of naval warfare, honed by centuries of conflict in the Mediterranean. 
The moment when Vasco da Gama entered the Indian Ocean in 1498, 
the principle that the seas should be a zone of peaceful trade came to 
an immediate end. Portuguese flotillas began bombarding and sack- 
ing every port city they came across, then seizing control of strategic 
points and extorting protection money from unarmed Indian Ocean 
merchants for the right to carry on their business unmolested. 

At almost exactly the same time, Christopher Columbus — a Geno- 
ese mapmaker seeking a short-cut to China — touched land in the New 
World, and the Spanish and Portuguese empires stumbled into the 
greatest economic windfall in human history: entire continents full of 
unfathomable wealth, whose inhabitants, armed only with Stone Age 
weapons, began conveniently dying almost as soon as they arrived. The 
conquest of Mexico and Peru led to the discovery of enormous new 
sources of precious metal, and these were exploited ruthlessly and sys- 
tematically, even to the point of largely exterminating the surrounding 
populations to extract as much precious metal as quickly as possible. 
As Kenneth Pomeranz has recently pointed out, none of this would 
have been possible were it not for the practically unlimited Asian de- 
mand for precious metals. 

Had China in particular not had such a dynamic economy that 
changing its metallic base could absorb the staggering quanti- 
ties of silver mined in the New World over three centuries, 



those mines might have become unprofitable within a few de- 
cades. The massive inflation of silver-denominated prices in 
Europe from 1500 to 1640 indicates a shrinking value for the 
metal there even with Asia draining off much of the supply. 8 

By 1540, a silver glut caused a collapse in prices across Europe; the 
American mines would, at this point, simply have stopped functioning, 
and the entire project of American colonization foundered, had it not 
been for the demand from China.' Treasure galleons moving toward 
Europe soon refrained from unloading their cargoes, instead rounding 
the horn of Africa and proceeding across the Indian Ocean toward 
Canton. After 1571, with the foundation of the Spanish city of Manila, 
they began to move directly across the Pacific. By the late sixteenth 
century, China was importing almost fifty tons of silver a year, about 
90 percent of its silver, and by the early seventeenth century, 116 tons, 
or over 97 percent. 10 Huge amounts of silk, porcelain, and other Chi- 
nese products had to be exported to pay for it. Many of these Chinese 
products, in turn, ended up in the new cities of Central and South 
America. This Asian trade became the single most significant factor 
in the emerging global economy, and those who ultimately controlled 
the financial levers — particularly Italian, Dutch, and German merchant 
bankers — became fantastically rich. 

But how exactly did the new global economy cause the collapse 
of living standards in Europe? One thing we do know: it clearly was 
not by making large amounts of precious metal available for everyday 
transactions. If anything, the effect was the opposite. While European 
mints were stamping out enormous numbers of rials, thalers, ducats, 
and doubloons, which became the new medium of trade from Ni- 
caragua to Bengal, almost none found their way into the pockets of 
ordinary Europeans. Instead, we hear constant complaints about the 
shortage of currency. In England: 

For much of the Tudor period the circulating medium was so 
small that the taxable population simply did not have sufficient 
coin in which to pay the benevolences, subsidies, and tenths 
levied upon them, and time and time again household plate, 
the handiest near money that most people possessed, had to be 
surrendered. 11 

This was the case in most of Europe. Despite the massive influx 
of metal from the Americas, most families were so low on cash that 



they were regularly reduced to melting down the family silver to pay 
their taxes. 

This was because taxes had to be paid in metal. Everyday business 
in contrast continued to be transacted much as it had in the Middle 
Ages, by means of various forms of virtual credit money: tallies, prom- 
issory notes, or, within smaller communities, simply by keeping track 
of who owed what to whom. What really caused the inflation is that 
those who ended up in control of the bullion — governments, bankers, 
large-scale merchants — were able to use that control to begin chang- 
ing the rules, first by insisting that gold and silver were money, and 
second by introducing new forms of credit-money for their own use 
while slowly undermining and destroying the local systems of trust that 
had allowed small-scale communities across Europe to operate largely 
without the use of metal currency. 

This was a political battle, even if it was also a conceptual argu- 
ment about the nature of money. The new regime of bullion money 
could only be imposed through almost unparalleled violence — not only 
overseas, but at home as well. In much of Europe, the first reaction to 
the "price revolution" and accompanying enclosures of common lands 
was not very different from what had so recently happened in China: 
thousands of one-time peasants fleeing or being forced out of their vil- 
lages to become vagabonds or "masterless men," a process that culmi- 
nated in popular insurrections. The reaction of European governments, 
however, was entirely different. The rebellions were crushed, and this 
time, no subsequent concessions were forthcoming. Vagabonds were 
rounded up, exported to the colonies as indentured laborers, and draft- 
ed into colonial armies and navies — or, eventually, set to work in 
factories at home. 

Almost all of this was carried out through a manipulation of debt. 
As a result, the very nature of debt, too, became once again one of the 
principal bones of contention. 

Part I: 

Greed, Terror, Indignation, Debt 

No doubt scholars will never stop arguing about the reasons for the 
great "price revolution" — largely because it's not clear what kind of 
tools can be applied. Can we really use the methods of modern econom- 
ics, which were designed to understand how contemporary economic 



institutions operate, to describe the political battles that led to the 
creation of those very institutions? 

This is not just a conceptual problem. There are moral dangers 
here. To take what might seem an "objective," macro-economic ap- 
proach to the origins of the world economy would be to treat the 
behavior of early European explorers, merchants, and conquerors as if 
they were simply rational responses to opportunities — as if this were 
just what anyone would have done in the same situation. This is what 
the use of equations so often does: make it seem perfectly natural to 
assume that, if the price of silver in China is twice what it is in Seville, 
and inhabitants of Seville are capable of getting their hands on large 
quantities of silver and transporting it to China, then clearly they will, 
even if doing so requires the destruction of entire civilizations. Or if 
there is a demand for sugar in England, and enslaving millions is the 
easiest way to acquire labor to produce it, then it is inevitable that 
some will enslave them. In fact, history makes it quite clear that this is 
not the case. Any number of civilizations have probably been in a posi- 
tion to wreak havoc on the scale that the European powers did in the 
sixteenth and seventeenth centuries (Ming China itself was an obvious 
candidate), but almost none actually did so. 12 

Consider, for instance, how the gold and silver from the American 
mines were extracted. Mining operations began almost immediately 
upon the fall of the Aztec capital of Tenochtitlan in 1521. While we 
are used to assuming that the Mexican population was devastated sim- 
ply as an effect of newly introduced European diseases, contemporary 
observers felt that the dragooning of the newly conquered natives to 
work in the mines was at least equally responsible. 13 In The Conquest 
of America, Tzvetan Todorov offers a compendium of some of the 
most chilling reports, mostly from Spanish priests and friars who, even 
when committed in principle to the belief that the extermination of 
the Indians was the judgment of God, could not disguise their horror 
at scenes of Spanish soldiers testing the blades of their weapons by 
eviscerating random passers-by, and tearing babies off their mother's 
backs to be eaten by dogs. Such acts might perhaps be written off as 
what one would expect when a collection of heavily armed men — many 
of violent criminal background — are given absolute impunity; but the 
reports from the mines imply something far more systematic. When 
Fray Toribio de Motolinia wrote of the ten plagues that he believed 
God had visited on the inhabitants of Mexico, he listed smallpox, war, 
famine, labor exactions, taxes (which caused many to sell their children 
to moneylenders, others to be tortured to death in cruel prisons), and 



the thousands who died in the building of the capital city. Above all, he 
insisted, were the uncountable numbers who died in the mines: 

The eighth plague was the slaves whom the Spaniards made in 
order to put them to work in the mines. At first those who were 
already slaves of the Aztecs were taken; then those who had 
given evidence of insubordination; finally all those who could 
be caught. During the first years after the conquest, the slave 
traffic flourished, and slaves often changed master. They pro- 
duced so many marks on their faces, in addition to the royal 
brand, that they had their faces covered with letters, for they 
bore the marks of all who had bought and sold them. 

The ninth plague was the service in the mines, to which the 
heavily laden Indians traveled sixty leagues or more to carry 
provisions . . . When their food gave out they died, either at 
the mines or on the road, for they had no money to buy food 
and there was no one to give it to them. Some reached home 
in such a state that they died soon after. The bodies of those 
Indians and of the slaves who died in the mines produced such 
a stench that it caused a pestilence, especially at the mines of 
Oaxaca. For half a league around these mines and along a great 
part of the road one could scarcely avoid walking over dead 
bodies or bones, and the flocks of birds and crows that came 
to fatten themselves upon the corpses were so numerous that 
they darkened the sun." 14 

Similar scenes were reported in Peru, where whole regions were 
depopulated by forced service in the mines, and Hispaniola, where the 
indigenous population was eradicated entirely. 15 

When dealing with conquistadors, we are speaking not just of 
simple greed, but greed raised to mythic proportions. This is, after all, 
what they are best remembered for. They never seemed to get enough. 
Even after the conquest of Tenochtitlan or Cuzco, and the acquisition 
of hitherto-unimaginable riches, the conquerors almost invariably re- 
grouped and started off in search of more treasure. 

Moralists throughout the ages have inveighed against the endless- 
ness of human greed, just as they have against our supposedly endless 
lust for power. What history actually reveals, though, is that while 
humans may be justly accused of having a proclivity to accuse others of 
acting like conquistadors, few really act this way themselves. Even for 
the most ambitious of us, our dreams are more like Sindbad's: to have 
adventures, to acquire the means to settle down and live an enjoyable 



life, and then, to enjoy it. Max Weber of course argued that the es- 
sence of capitalism is the urge — which he thought first appeared in 
Calvinism — never to settle down, but to engage in endless expansion. 
But the conquistadors were good Medieval Catholics, even if ones usu- 
ally drawn from the most ruthless and unprincipled elements of Span- 
ish society. Why the unrelenting drive for more and more and more? 

It might help, I think, to go back to the very onset of Hernan Cor- 
tes's conquest of Mexico: What were his immediate motives? Cortes 
had migrated to the colony of Hispaniola in 1504, dreaming of glory 
and adventure, but for the first decade and a half, his adventures had 
largely consisted of seducing other people's wives. In 1518, however, 
he managed to finagle his way into being named commander of an 
expedition to establish a Spanish presence on the mainland. As Bernal 
Diaz del Castillo, who accompanied him, later wrote, around this time 

He began to adorn himself and be more careful of his appear- 
ance than before. He wore a plume of feathers, with a medal- 
lion and a gold chain, and a velvet cloak trimmed with loops 
of gold. In fact he looked like a bold and gallant Captain. 
However, he had no money to defray the expenses I have spo- 
ken about, for at the time he was very poor and much in debt, 
despite the fact that he had a good estate of Indians and was 
getting gold from the mines. But all this he spent on his person, 
on finery for his wife, whom he had recently married, and on 
entertaining guests . . . 

When some merchant friends of his heard that he had ob- 
tained his command as Captain General, they lent him four 
thousand gold pesos in coin and another four thousand in 
goods secured on his Indians and estates. He then ordered two 
standards and banners to be made, worked in gold with the 
royal arms and a cross on each side with a legend which said, 
"Comrades, let us follow the sign of the Holy Cross with true 
faith, and through it we shall conquer." 16 

In other words, he'd been living beyond his means, got himself 
in trouble, and decided, like a reckless gambler, to double down and 
go for broke. Unsurprising, then, that when the governor at the last 
minute decided to cancel the expedition, Cortes ignored him and sailed 
for the mainland with six hundred men, offering each an equal share 
in the expedition's profits. On landing he burned his boats, effectively 
staking everything on victory. 



Let us skip, then, from the beginning of Diaz's book to its final 
chapter. Three years later, through some of the most ingenious, ruth- 
less, 'brilliant, and utterly dishonorable behavior by a military leader 
ever recorded, Cortes had his victory. After eight months of grueling 
house-to-house warfare and the death of perhaps a hundred thousand 
Aztecs, Tenochtitlan, one of the greatest cities of the world, lay entirely 
destroyed. The imperial treasury was secured, and the time had come, 
then, for it to be divided in shares amongst the surviving soldiers. 

Yet according to Diaz, the result among the men was outrage. The 
officers connived to sequester most of the gold, and when the final 
tally was announced, the troops learned that they would be receiving 
only fifty to eighty pesos each. What's more, the better part of their 
shares was immediately seized again by the officers in their capacity 
of creditors — since Cortes had insisted that the men be billed for any 
replacement equipment and medical care they had received during the 
siege. Most found they had actually lost money on the deal. Diaz 

We were all very deeply in debt. A crossbow was not to be 
purchased for less than forty or fifty pesos, a musket cost one 
hundred, a sword fifty, and a horse from 800 to 1000 pesos, 
and above. Thus extravagantly did we have to pay for every- 
thing! A surgeon, who called himself Mastre Juan, who had 
tended some very bad wounds, charged wildly inflated fees, 
and so did a quack named Murcia, who was an apothecary and 
a barber and also treated wounds, and there were thirty other 
tricks and swindles for which payment was demanded of our 
shares as soon as we received them. 

Serious complaints were made about this, and the only rem- 
edy that Cortes provided was to appoint two trustworthy per- 
sons who knew the prices of goods and could value anything 
that we had bought on credit. An order went out that whatever 
price was placed on our purchases or the surgeon's cures must 
be accepted, but that if we had no money, our creditors must 
wait two years for payment. 17 

Spanish merchants soon arrived charging wildly inflated prices for 
basic necessities, causing further outrage, until: 

Our general becoming weary of the continual reproaches which 
were thrown out against him, saying he had stolen everything 
for himself, and the endless petitions for loans and advance 



in pay, determined at once to get rid of the most troublesome 
fellows, by forming settlements in those provinces which ap- 
peared most eligible for this purpose. 18 

These were the men who ended up in control of the provinces, and 
who established local administration, taxes, and labor regimes. Which 
makes it a little easier to understand the descriptions of Indians with 
their faces covered by names like so many counter-endorsed checks, 
or the mines surrounded by miles of rotting corpses. We are not deal- 
ing with a psychology of cold, calculating greed, but of a much more 
complicated mix of shame and righteous indignation, and of the frantic 
urgency of debts that would only compound and accumulate (these 
were, almost certainly, interest-bearing loans), and outrage at the idea 
that, after all they had gone through, they should be held to owe any- 
thing to begin with. 

And what of Cortes? He had just pulled off perhaps the greatest 
act of theft in world history. Certainly, his original debts had now 
been rendered inconsequential. Yet he somehow always seemed to find 
himself in new ones. Creditors were already starting to repossess his 
holdings while he was off on an expedition to Honduras in 1526; on his 
return, he wrote the Emperor Charles V that his expenses were such 
that "all I have received has been insufficient to relive me from misery 
and poverty, being at the moment I write in debt for upwards of five 
hundred ounces of gold, without possessing a single peso towards it." 19 
Disingenuous, no doubt (Cortes at the time owned his own personal 
palace), but only a few years later, he was reduced to pawning his 
wife's jewelry to help finance a series of expeditions to California, hop- 
ing to restore his fortunes. When those failed to turn a profit, he ended 
up so besieged by creditors that he had to return to Spain to petition 
the emperor in person. 20 

If all this seems suspiciously reminiscent of the fourth Crusade, with its 
indebted knights stripping whole foreign cities of their wealth and still 
somehow winding up only one step ahead of their creditors, there is a 
reason. The financial capital that backed these expeditions came from 
more or less the same place (if in this case Genoa, not Venice). What's 
more, that relationship, between the daring adventurer on the one 
hand, the gambler willing to take any sort of risk, and on the other, 
the careful financier, whose entire operations are organized around 



producing steady, mathematical, inexorable growth of income, lies at 
the very heart of what we now call "capitalism." 

As a result, our current economic system has always been marked 
by a peculiar dual character. Scholars have long been fascinated by 
Spanish debates that ensued, in Spanish universities like Santander, 
about the humanity of the Indians (Did they have souls? Could they 
have legal rights? Was it legitimate to forcibly enslave them?), just as 
they have argued about the real attitudes of the conquistadors (was it 
contempt, revulsion, or even grudging admiration for their adversar- 
ies?) 21 The real point is that at the key moments of decision, none of 
this mattered. Those making the decisions did not feel they were in 
control anyway; those who were did not particularly care to know the 
details. To take a telling example: after the earliest years of the gold 
and silver mines described by Motolinia, where millions of Indians 
were simply rounded up and marched off to their deaths, colonists 
settled on a policy of debt peonage: the usual trick of demanding 
heavy taxes, lending money at interest to those who could not pay, 
and then demanding that the loans be repaid with work. Royal agents 
regularly attempted to forbid such practices, arguing that the Indians 
were now Christian and that this violated their rights as loyal subjects 
of the Spanish crown. But as with almost all such royal efforts to act 
as protector of the Indians, the result was the same. Financial exigen- 
cies ended up taking precedence. Charles V himself was deeply in debt 
to banking firms in Florence, Genoa, and Naples, and gold and silver 
from the Americas made up perhaps one-fifth of his total revenue. In 
the end, despite a lot of initial noise and the (usually quite sincere) 
moral outrage on the part of the king's emissaries, such decrees were 
either ignored or, at best, enforced for a year or two before being al- 
lowed to slip into abeyance. 22 

All of this helps explain why the Church had been so uncompromising 
in its attitude toward usury. It was not just a philosophical question; 
it was a matter of moral rivalry. Money always has the potential to 
become a moral imperative unto itself. Allow it to expand, and it can 
quickly become a morality so imperative that all others seem frivolous 
in comparison. For the debtor, the world is reduced to a collection of 
potential dangers, potential tools, and potential merchandise. 23 Even 
human relations become a matter of cost-benefit calculation. Clearly 
this is the way the conquistadors viewed the worlds that they set out 
to conquer. 



It is the peculiar feature of modern capitalism to create social ar- 
rangements that essentially force us to think this way. The structure of 
the corporation is a telling case in point — and it is no coincidence that 
the first major joint-stock corporations in the world were the English 
and Dutch East India companies, ones that pursued that very same 
combination of exploration, conquest, and extraction as did the con- 
quistadors. It is a structure designed to eliminate all moral imperatives 
but profit. The executives who make decisions can argue — and regu- 
larly do — that, if it were their own money, of course they would not 
fire lifelong employees a week before retirement, or dump carcinogenic 
waste next to schools. Yet they are morally bound to ignore such con- 
siderations, because they are mere employees whose only responsibility 
is to provide the maximum return on investment for the company's 
stockholders. (The stockholders, of course, are not given any say.) 

The figure of Cortes is instructive for another reason. We are 
speaking of a man who, in 1521, had conquered a kingdom and was 
sitting atop a vast pile of gold. Neither did he have any intention of 
giving it away — even to his followers. Five years later, he was claiming 
to be a penniless debtor. How was this possible? 

The obvious answer would be: Cortes was not a king, he was a 
subject of the King of Spain, living within the legal structure of a king- 
dom that insisted that, if he were not good at managing his money, 
he would lose it. Yet as we've seen, the king's laws could be ignored 
in other cases. What's more, even kings were not entirely free agents. 
Charles V was continually in debt, and when his son Philip II — his 
armies fighting on three different fronts at once — attempted the old 
Medieval trick of defaulting, all his creditors, from the Genoese Bank 
of St. George to the German Fuggers and Welsers, closed ranks to 
insist that he would receive no further loans until he started honoring 
his commitments. 24 

Capital, then, is not simply money. It is not even just wealth that 
can be turned into money. But neither is it just the use of political pow- 
er to help one use one's money to make more money. Cortes was trying 
to do exactly that: in classical Axial Age fashion, he was attempting 
to use his conquests to acquire plunder, and slaves to work the mines, 
with which he could pay his soldiers and suppliers cash to embark on 
even further conquests. It was a tried-and-true formula. But for all the 
other conquistadors, it provided a spectacular failure. 

This would seem to mark the difference. In the Axial Age, money 
was a tool of empire. It might have been convenient for rulers to pro- 
mulgate markets in which everyone would treat money as an end in 
itself; at times, rulers might have even come to see the whole apparatus 



of government as a profit-making enterprise; but money always re- 
mained a political instrument. This is why when the empires collapsed 
and armies were demobilized, the whole apparatus could simply melt 
away. Under the newly emerging capitalist order, the logic of money 
was granted autonomy; political and military power were then gradu- 
ally reorganized around it. True, this was a financial logic that could 
never have existed without states and armies behind it in the first 
place. As we have seen in the case of Medieval Islam, under genuine 
free-market conditions — in which the state is not involved in regulat- 
ing the market in any significant way, even in enforcing commercial 
contracts — purely competitive markets will not develop, and loans at 
interest will become effectively impossible to collect. It was only the 
Islamic prohibition against usury, really, that made it possible for them 
to create an economic system that stood so far apart from the state. 

Martin Luther was making this very point in 1524, right around the 
time that Cortes was first beginning to have trouble with his creditors. 
It is all very well, Luther said, for us to imagine that all might live as 
true Christians, in accordance with the dictates of the Gospel. But in 
fact there are few who are really capable of acting this way: 

Christians are rare in this world; therefore the world needs a 
strict, hard, temporal government that will compel and con- 
strain the wicked not to rob and to return what they borrow, 
even though a Christian ought not to demand it, or even hope 
to get it back. This is necessary in order that the world not 
become a desert, peace may not perish, and trade and society 
not be utterly destroyed; all of which would happen if we were 
to rule the world according to the Gospel and not drive and 
compel the wicked, by laws and the use of force, to do what is 
right . . . Let no one think that the world can be ruled without 
blood; the sword of the ruler must be red and bloody; for the 
world will and must be evil, and the sword is God's rod and 
vengeance upon it. 25 

"Not to rob and to return what they borrow" — a telling juxtaposi- 
tion, considering that in Scholastic theory, lending money at interest 
had itself been considered theft. 

And Luther was referring to interest-bearing loans here. The story 
of how he got to this point is telling. Luther began his career as a re- 
former in 1520 with fiery campaigns against usury; in fact, one of his 
objections to the sale of Church indulgences was that it was itself a 
form of spiritual usury. These positions won him enormous popular 



support in towns and villages. However, he soon realized that he'd un- 
leashed a genie that threatened to turn the whole world upside-down. 
More radical reformers appeared, arguing that the poor were not mor- 
ally obliged to repay the interest on usurious loans, and proposing the 
revival of Old Testament institutions like the sabbatical year. They 
were followed by outright revolutionary preachers who began once 
again questioning the very legitimacy of aristocratic privilege and pri- 
vate property. In 1525, the year after Luther's sermon, there was a mas- 
sive uprising of peasants, miners, and poor townsfolk across Germany: 
the rebels, in most cases, representing themselves as simple Christians 
aiming to restore the true communism of the Gospels. Over a hundred 
thousand were slaughtered. Already in 1524, Luther had a sense that 
matters were spilling out of control and that he would have to choose 
sides: in that text, he did so. Old Testament laws like the Sabbatical 
year, he argued, are no longer binding; the Gospel merely describes 
ideal behavior; humans are sinful creatures, so law is necessary; while 
usury is a sin, a four to five-percent rate of interest is currently legal 
under certain circumstances; and while collecting that interest is sinful, 
under no circumstances is it legitimate to argue that for that reason, 
borrowers have the right to break the law. 26 

The Swiss Protestant reformer Zwingli was even more explicit. 
God, he argued, gave us the divine law: to love thy neighbor as thyself. 
If we truly kept this law, humans would give freely to one another, and 
private property would not exist. However, Jesus excepted, no human 
being has ever been able to live up to this pure communistic standard. 
Therefore, God has also given us a second, inferior, human law, to be 
enforced by the civil authorities. While this inferior law cannot com- 
pel us to act as we really ought to act ("the magistrate can force no 
one to lend out what belongs to him without hope of recompense or 
profit") — at least it can make us follow the lead of the apostle Paul, 
who said: "Pay all men what you owe." 27 

Soon afterward, Calvin was to reject the blanket ban on usury 
entirely, and by 1650, almost all Protestant denominations had come to 
agree with his position that a reasonable rate of interest (usually five 
percent) was not sinful, provided the lenders act in good conscience, 
do not make lending their exclusive business, and do not exploit the 
poor. 28 (Catholic doctrine was slower to come around, but it did ulti- 
mately accede by passive acquiescence.) 

If one looks at how all this was justified, two things jump out. First, 
Protestant thinkers all continued to make the old Medieval argument 
about interesse: that "interest" is really compensation for the money 
that the lender would have made had he been able to place his money 



in some more profitable investment. Originally, this logic was just ap- 
plied to commercial loans. Increasingly, it was now applied to all loans. 
Far from being unnatural, then, the growth of money was now treated 
as completely expected. All money was assumed to be capital. 29 Second, 
the assumption that usury is something that one properly practices on 
one's enemies, and therefore, by extension, that all commerce partakes 
something of the nature of war, never entirely disappears. Calvin, for 
instance, denied that Deuteronomy only referred to the Amalekites; 
clearly, he said, it meant that usury was acceptable when dealing with 
Syrians or Egyptians; indeed with all nations with whom the Jews 
traded. 30 The result of opening the gates was, at least tacitly, to sug- 
gest that one could now treat anyone, even a neighbor, as a foreigner. 31 
One need only observe how European merchant adventurers of the day 
actually were treating foreigners, in Asia, Africa, and the Americas, to 
understand what this might mean in practice. 

Or, one might look closer to home. Take the story of another 
well-known debtor of the time, the Margrave Casimir of Brandenburg- 
Ansbach (1481-1527), of the famous Hohenzollern dynasty: 

Casimir was the son of Margrave Friedrich the Elder of Branden- 
burg, who has come to be known as one of the "mad princes" of the 
German Renaissance. Sources differ on just how mad he actually was. 
One contemporary chronicle describes him as "somewhat deranged in 
his head from too much racing and jousting;" most agree that he was 
given to fits of inexplicable rage, as well as to the sponsorship of wild, 
extravagant festivals, said often to have degenerated into wild baccha- 
nalian orgies. 32 

All agree, however, that he was poor at managing his money. 
At the beginning of 1515, Friedrich was in such financial trouble — he 
is said to have owed 200,000 guilders — that he alerted his creditors, 
mostly fellow nobles, that he might soon be forced to temporarily sus- 
pend interest payments on his debts. This seems to have caused a crisis 
of faith, and within a matter of weeks, his son Casimir staged a palace 
coup — moving, in the early hours of February 26, 1515, to seize control 
of the castle of Plassenburg while his father was distracted with the 
celebration of Carnival, then forcing him to sign papers abdicating for 
reason of mental infirmity. Friedrich spent the rest of his life confined 
in Plassenburg, denied all visitors and correspondence. When at one 
point his guards requested that the new Margrave provide a couple 
guilders so he could pass the time gambling with them, Casimir made 
a great public show of refusal, stating (ridiculously, of course) that his 
father had left his affairs in such disastrous shape that he could not 
possibly afford to. 33 



Casimir dutifully doled out governorships and other prize offices to 
his father's creditors. He tried to get his house in order, but this proved 
surprisingly difficult. His enthusiastic embrace of Luther's reforms in 
1521 clearly had as much to do with the prospect of getting his hands 
on Church lands and monastic assets than with any particular religious 
fervor. Yet at first, the disposition of Church property remained moot, 
and Casimir himself compounded his problems by running up gambling 
debts of his own said to have amounted to nearly 50,000 guilders. 34 

Placing his creditors in charge of the civil administration had pre- 
dictable effects: increasing exactions on his subjects, many of whom 
became hopelessly indebted themselves. Unsurprisingly, Casimir's lands 
in the Tauber Valley in Franconia became one of the epicenters of 
the revolt of 1525. Bands of armed villagers assembled, declaring they 
would obey no law that did not accord with "the holy word of God." 
At first, the nobles, isolated in their scattered castles, offered little re- 
sistance. The rebel leaders — many of them local shopkeepers, butchers, 
and other prominent men from nearby towns — began with a largely 
orderly campaign of tearing down castle fortifications, their knightly 
occupants being offered guarantees of safety if they cooperated, agreed 
to abandon their feudal privileges, and swore oaths to abide by the reb- 
els' Twelve Articles. Many complied. The real venom of the rebels was 
reserved for cathedrals and monasteries, dozens of which were sacked, 
pillaged, and destroyed. 

Casimir's reaction was to hedge his bets. At first he bided his time, 
assembling an armed force of about two thousand experienced soldiers, 
but refusing to intervene as rebels pillaged several nearby monasteries; 
in fact, negotiating with the various rebel bands in such apparent good 
faith that many believed he was preparing to join them "as a Christian 
brother." 35 In May, however, after the knights of the Swabian League 
defeated the rebels of the Christian Union to the south, Casimir swung 
into action, his forces brushing aside poorly disciplined rebel bands 
to sweep through his own territories like a conquering army, burning 
and pillaging villages and towns, slaughtering women and children. In 
every town he set up punitive tribunals, and seized all looted property, 
which he kept, even as his men also expropriated any wealth still to 
be found in the region's cathedrals, ostensibly as emergency loans to 
pay his troops. 

It seems significant that Casimir was, of all the German princes, 
both the longest to waver before intervening, and the most savagely 
vengeful once he did. His forces became notorious not only for execut- 
ing accused rebels, but systematically chopping off the fingers of ac- 
cused collaborators, his executioner keeping a grim ledger of amputated 



body parts for later reimbursement — a kind of carnal inversion of the 
account ledgers that had caused him so much trouble in his life. At one 
point, in the town of Kitzingen, Casimir ordered the gouging out of the 
eyes of fifty-eight burghers who had, he declared, "refused to look at 
him as their lord." Afterward he received the following bill: 36 

80 beheaded 

69 eyes put out or fingers cut off 114 Vi fl. 

from this to deduct 

received from the Rothenburgers 10 fl. 

received from Ludwig von Hutten 2 fl. 


Plus 2 months' pay at 8 fl. per month 16 fl. 

Total 118 Vi fl. 

[Signed] Augustin, the executioner, who the Kitzingers call "Master 

The repression eventually inspired Casimir's brother Georg (later 
known as "the Pious") to write a letter asking him if Casimir was in- 
tending to take up a trade — since, as Georg gently reminded him, he 
could not very well continue to be a feudal overlord if his peasants 
were all dead. 37 

With such things happening, it is hardly surprising that men like 
Thomas Hobbes came to imagine the basic nature of society as a war 
of all against all, from which only the absolute power of monarchs 
could save us. At the same time, Casimir's behavior — combining as it 
does a general attitude of unprincipled, cold-blooded calculation with 
outbursts of almost inexplicably vindictive cruelty — seems, like that of 
Cortes's angry foot soldiers when unleashed on the Aztec provinces, to 
embody something essential about the psychology of debt. Or, more 
precisely, perhaps, about the debtor who feels he has done nothing to 
deserve being placed in his position: the frantic urgency of having to 
convert everything around oneself into money, and rage and indigna- 
tion at having been reduced to the sort of person who would do so. 



Part II: 

The World of Credit and the World of Interest 

Of all the beings that have existence 
only in the minds of men, nothing is 
more fantastical and nice than Credit; 
it is never to be forced; it hangs upon 
opinion; it depends upon our passions 
of hope and fear; it comes many times 
unsought-f or, and often goes away 
without reason; and once lost, it is 
hardly to be quite recovered. 

— Charles Davenant, 1696 

He that has lost his credit is dead to 
the world. 

— English and German Proverb 

The peasants' visions of communistic brotherhood did not come out 
of nowhere. They were rooted in real daily experience: of the main- 
tenance of common fields and forests, of everyday cooperation and 
neighborly solidarity. It is out of such homely experience of everyday 
communism that grand mythic visions are always built. 38 Obviously, 
rural communities were also divided, squabbling places, since com- 
munities always are — but insofar as they are communities at all, they 
are necessarily founded on a ground of mutual aid. The same, inci- 
dentally, can be said of members of the aristocracy, who might have 
fought endlessly over love, land, honor, and religion, but nonetheless 
still cooperated remarkably well with one another when it really mat- 
tered (most of all, when their position as aristocrats was threatened); 
just as the merchants and bankers, much as they competed with one 
another, managed to close ranks when it really mattered. This is what 
I refer to as the "communism of the rich," and it is a powerful force in 
human history. 39 

The same, as we've seen repeatedly, applies to credit. There are 
always different standards for those one considers friends or neighbors. 
The inexorable nature of interest-bearing debt, and the alternately sav- 
age and calculating behavior of those enslaved to it, are typical above 
all of dealings between strangers: it's unlikely that Casimir felt much 
more kinship with his peasants than Cortes did with the Aztecs (in 



fact, most likely less, since Aztec warriors were at least aristocrats). 
Inside the small towns and rural hamlets, where the state was mostly 
far away, Medieval standards survived intact, and "credit" was just as 
much a matter of honor and reputation as it had ever been. The great 
untold story of our current age is of how these ancient credit systems 
were ultimately destroyed. 

Recent historical research, notably that of Craig Muldrew, who has 
sifted through thousands of inventories and court cases from sixteenth- 
and seventeenth-century England, has caused us to revise almost all our 
old assumptions about what everyday economic life at that time was 
like. Of course, very little of the American gold and silver that reached 
Europe actually ended up in the pockets of ordinary farmers, mercers, 
or haberdashers. 40 The lion's share stayed in the coffers of either the ar- 
istocracy or the great London merchants, or else in the royal treasury. 41 
Small change was almost nonexistent. As I've already pointed out, in 
the poorer neighborhoods of cities or large towns, shopkeepers would 
issue their own lead, leather, or wooden token money; in the sixteenth 
century this became something of a fad, with artisans and even poor 
widows producing their own currency as a way to make ends meet. 42 
Elsewhere, those frequenting the local butcher, baker, or shoemaker 
would simply put things on the tab. The same was true of those attend- 
ing weekly markets, or selling neighbors milk or cheese or candle-wax. 
In a typical village, the only people likely to pay cash were passing 
travelers, and those considered riff-raff: paupers and ne'er-do-wells so 
notoriously down on their luck that no one would extend credit to 
them. Since everyone was involved in selling something, however just 
about everyone was both creditor and debtor; most family income took 
the form of promises from other families; everyone knew and kept 
count of what their neighbors owed one another; and every six months 
or year or so, communities would held a general public "reckoning," 
cancelling debts out against each other in a great circle, with only those 
differences then remaining when all was done being settled by use of 
coin or goods. 43 

The reason that this upends our assumptions is that we're used 
to blaming the rise of capitalism on something vaguely called "the 
market" — the breakup of older systems of mutual aid and solidarity, 
and the creation of a world of cold calculation, where everything had 
its price. Really, English villagers appear to have seen no contradiction 
between the two. On the one hand, they believed strongly in the col- 
lective stewardship of fields, streams, and forests, and the need to help 
neighbors in difficulty. On the other hand, markets were seen as a kind 
of attenuated version of the same principle, since they were entirely 



founded on trust. Much like the Tiv women with their gifts of yams 
and okra, neighbors assumed they ought to be constantly slightly in 
debt to one another. At the same time, most seem to have been quite 
comfortable with the idea of buying and selling, or even with market 
fluctuations, provided it didn't get to the point of threatening honest 
families' livelihoods. 44 Even when loans at interest began to be legalized 
in 1545, that did not ruffle too many feathers, as long as it took place 
within that same larger moral framework: lending was considered an 
appropriate vocation, for example, for widows with no other source 
of income, or as a way for neighbors to share in the profits from 
some minor commercial venture. William Stout, a Quaker merchant 
from Lancashire, spoke glowingly of Henry Coward, the tradesman in 
whose shop he first apprenticed: 

My master then had a full trade of groceries, ironmongerware, 
and several other goods, and very much respected and trusted, 
not only by the people of his own religious profession, but by 
all others of all professions and circumstances . . . His credit 
was so much, that any who had money to dispose of lodged it 
with him to put out to interest or to make use of it. 45 

In this world, trust was everything. Most money literally was trust, 
since most credit arrangements were handshake deals. When people 
used the word "credit," they referred above all to a reputation for hon- 
esty and integrity; and a man or woman's honor, virtue, and respect- 
ability, but also, reputation for generosity, decency, and good-natured 
sociability, were at least as important considerations when deciding 
whether to make a loan as were assessments of net income. 46 As a 
result, financial terms became indistinguishable from moral ones. One 
could speak of others as "worthies," as "a woman of high estimation" 
or "a man of no account," and equally of "giving credit" to someone's 
words when one believes what they say ("credit" is from the same root 
as "creed" or "credibility"), or of "extending credit" to them, when one 
takes them at their word that they will pay one back. 

One should not idealize the situation. This was a highly patriar- 
chal world: a man's wife or daughter's reputation for chastity was as 
much a part of his "credit" as his own reputation for kindness or piety. 
What's more, almost all people below the age of 30, male or female, 
were employed as servants in someone else's household — as farmhands, 
milkmaids, apprentices — and as such, were of "no account" at all. 47 Fi- 
nally, those who lost credibility in the eyes of the community became, 
effectively, pariahs, and descended into the criminal or semi-criminal 



classes of rootless laborers, beggars, harlots, cutpurses, hawkers, ped- 
lars, fortune-tellers, minstrels, and other such "masterless men" or 
"women of ill repute." 48 

Cold cash was employed largely between strangers, or when pay- 
ing rents, tithes, and taxes to landlords, bailiffs, priests, and other 
superiors. The landed gentry and wealthy merchants, who eschewed 
handshake deals, would often use cash with one another, especially 
to pay off bills of exchange drawn on London markets. 49 Above all, 
gold and silver were used by the government to purchase arms and 
pay soldiers, and amongst the criminal classes themselves. This meant 
that coins were most likely to be used both by the sort of people who 
ran the legal system — the magistrates, constables, and justices of the 
peace — and by those violent elements of society they saw it as their 
business to control. 

Over time, this led to an increasing disjuncture of moral universes. 
For most, who tried to avoid entanglement in the legal system just as 
much as they tried to avoid the affairs of soldiers and criminals, debt 
remained the very fabric of sociability. But those who spent their work- 
ing lives within the halls of government and great commercial houses 
gradually began to develop a very different perspective, whereby cash 
exchange was normal and it was debt that came to be seen as tinged 
with criminality. 

Each perspective turned on a certain tacit theory of the nature of 
society. For most English villagers, the real font and focus of social 
and moral life was not so much the church as the local ale-house — and 
community was embodied above all in the conviviality of popular festi- 
vals like Christmas or May Day, with everything that such celebrations 
entailed: the sharing of pleasures, the communion of the senses, all the 
physical embodiment of what was called "good neighborhood." Society 
was rooted above in the "love and amity" of friends and kin, and it 
found expression in all those forms of everyday communism (helping 
neighbors with chores, providing milk or cheese for old widows) that 
were seen to flow from it. Markets were not seen as contradicting this 
ethos of mutual aid. It was, much as it was for Tusi, an extension of 
mutual aid — and for much the same reason: because it operated en- 
tirely through trust and credit. 50 

England might not have produced a great theorist like Tusi, but 
one can find the same assumptions echoed in most of the Scholastic 
writers, as for instance in Jean Bodin's De Republica, widely circulated 



in English translation after 1605. "Amity and friendship," Bodin wrote, 
"are the foundation of all human and civil society" — they constitute 
that "true, natural justice" on which the whole legal structure of con- 
tracts, courts, and even government must necessarily be built. 51 Similar- 
ly, when economic thinkers reflected on the origins of the money, they 
spoke of "trusting, exchanging, and trading." 52 It was simply assumed 
that human relations came first. 

As a result, all moral relations came to be conceived as debts. "For- 
give us our debts" — this was the period, the very end of the Middle 
Ages, that this translation of the Lord's Prayer gained such universal 
popularity. Sins are debts to God: unavoidable, but perhaps manage- 
able, since at the end of time our moral debts and credits will be all 
canceled out against each other in God's final Reckoning. The notion 
of debt inserted itself into even the most intimate of human relations. 
Like the Tiv, Medieval villagers would sometimes refer to "flesh debts," 
but the notion was completely different: it referred to the right of either 
partner in a marriage to demand sex from the other, which in principle 
either could do whenever he or she desired. The phrase "paying one's 
debts" thus developed connotations, much as the Roman phrase "doing 
one's duty" had, centuries before. Geoffrey Chaucer even makes a pun 
out of "tally" (French: taille) and "tail" in the Shipman's Tale, a story 
about a woman who pays her husband's debts with sexual favors: "and 
if so I be faille, I am youre wyf, score it upon my taille." 53 

Even London merchants would occasionally appeal to the language 
of sociability, insisting that in the final analysis, all trade is built on 
credit, and credit is really just an extension of mutual aid. In 1696, for 
instance, Charles Davenant wrote that even if there were a general col- 
lapse of confidence in the credit system, it could not last long, because 
eventually, when people reflected on the matter and realized that credit 
is simply an extension of human society, 

They will find, that no trading nation ever did subsist, and 
carry on its business by real stock [that is, just coin and mer- 
chandise]; that trust and confidence in each other, are as nec- 
essary to link and hold a people together, as obedience, love, 
friendship, or the intercourse of speech. And when experience 
has taught man how weak he is, depending only on himself, 
he will be willing to help others, and call upon the assistance 
of his neighbors, which of course, by degrees, must set credit 
again afloat. 54 



Davenant was an unusual merchant (his father was a poet). More 
typical of his class were men like Thomas Hobbes, whose Leviathan, 
published in 1651, was in many ways an extended attack on the very idea 
that society is built on any sort of prior ties of communal solidarity. 

Hobbes might be considered the opening salvo of the new moral 
perspective, and it was a devastating one. When Leviathan came out, 
it's not clear what scandalized its readers more: its relentless materi- 
alism (Hobbes insisted that humans were basically machines whose 
actions could be understood by one single principle: that they tended 
to move toward the prospect of pleasure and away from the prospect 
of pain), or its resultant cynicism (if love, amity, and trust are such 
powerful forces, Hobbes asked, why is it that even within our families, 
we lock our most valuable possessions in strongboxes?) Still, Hobbes' 
ultimate argument — that humans, being driven by self-interest, cannot 
be trusted to treat each other justly of their own accord, and therefore 
that society only emerges when they come to realize that it is to their 
long-term advantage to give up a portion of their liberties and accept 
the absolute power of the King — differed little from arguments that 
theologians like Martin Luther had been making a century earlier. 
Hobbes simply substituted scientific language for biblical references." 

I want to draw particular attention to the underlying notion of 
"self-interest." 56 It is in a real sense the key to the new philosophy. 
The term first appears in English right around Hobbes' time, and it 
is, indeed, directly borrowed from interesse, the Roman law term for 
interest payments. When it was first introduced, most English authors 
seemed to view the idea that all human life can be explained as the pur- 
suit of self-interest as a cynical, foreign, Machiavellian idea, one that 
sat uncomfortably with traditional English mores. By the eighteenth 
century, most in educated society accepted it as simple common sense. 

But why "interest"? Why make a general theory of human motiva- 
tion out of a word that originally meant "penalty for late payment on 
a loan"? 

Part of the term's appeal was that it derived from bookkeeping. It 
was mathematical. This made it seem objective, even scientific. Saying 
we are all really pursuing our own self-interest provides a way to cut 
past the welter of passions and emotions that seem to govern our daily 
existence, and to motivate most of what we actually observe people 
to do (not only out of love and amity, but also envy, spite, devotion, 
pity, lust, embarrassment, torpor, indignation, and pride) and discover 
that, despite all this, most really important decisions are based on the 
rational calculation of material advantage — which means that they are 
fairly predictable as well. "Just as the physical world is ruled by the 



laws of movement," wrote Helvetius, in a passage reminiscent of Lord 
Shang, "no less is the moral universe ruled by laws of interest." 57 And 
of course it was on this assumption that all the quadratic equations of 
economic theory could ultimately be built.' 58 

The problem is that the origin of the concept is not rational at all. 
Its roots are theological, and the theological assumptions underpinning 
it never really went away. "Self-interest" is first attested to in the writ- 
ings of the Italian historian Francesco Guicciadini (who was, in fact, a 
friend of Machiavelli), around 1510, as a euphemism for St. Augustine's 
concept of "self-love." For Augustine, the "love of God" leads us to 
benevolence toward our fellows; self-love, in contrast, refers to the fact 
that, since the Fall of Man, we are cursed by endless, insatiable desires 
for self-gratification — so much so that, if left to our own devices, we 
will necessarily fall into universal competition, even war. Substituting 
"interest" for "love" must have seemed an obvious move, since the as- 
sumption that love is the primary emotion was precisely what authors 
like Guicciadini were trying to get away from. But it kept that same 
assumption of insatiable desires under the guise of impersonal math, 
since what is "interest" but the demand that money never cease to 
grow? The same was true when it became the term for investments — 
"I have a twelve-percent interest in that venture" — it is money placed 
in the continual pursuit of profit. 59 The very idea that human beings 
are motivated primarily by "self-interest," then, was rooted in the pro- 
foundly Christian assumption that we are all incorrigible sinners; left to 
our own devices, we will not simply pursue a certain level of comfort 
and happiness and then stop to enjoy it; we will never cash in the chips, 
like Sindbad, let alone question why we need to buy chips to begin 
with. And as Augustine already anticipated, infinite desires in a finite 
world means endless competition, which in turn is why, as Hobbes 
insisted, our only hope of social peace lies in contractual arrangements 
and strict enforcement by the apparatus of the state. 

The story of the origins of capitalism, then, is not the story of the 
gradual destruction of traditional communities by the impersonal pow- 
er of the market. It is, rather, the story of how an economy of credit 
was converted into an economy of interest; of the gradual transforma- 
tion of moral networks by the intrusion of the impersonal — and often 
vindictive — power of the state. English villagers in Elizabethan or Stu- 
art times did not like to appeal to the justice system, even when the 
law was in their favor — partly on the principle that neighbors should 



work things out with one another, but mainly, because the law was so 
extraordinarily harsh. Under Elizabeth, for example, the punishment 
for vagrancy (unemployment) was, for first offense, to have one's ears 
nailed to a pillory; for repeat offenders, death. 60 

The same was true of debt law, especially since debts could often, 
if the creditor was sufficiently vindictive, be treated as a crime. In Chel- 
sea around 1660, 

Margaret Sharpies was prosecuted for stealing cloth, "which 
she had converted into a petticoat for her own wearing," from 
Richard Bennett's shop. Her defense was that she had bar- 
gained with Bennett's servant for the cloth, "but having not 
money sufficient in her purse to pay for it, took it away with 
purpose to pay for it so soon as she could: and that she after- 
wards agreed with Mr Bennett of a price for it." Bennett con- 
firmed that this was so: after agreeing to pay him 22 shillings, 
Margaret "delivered a hamper with goods in it as a pawn for 
security of the money, and four shillings ninepence in mon- 
ey." But "soon after he disliked upon better consideration to 
hold agreement with her: and delivered the hamper and goods 
back," and commenced formal legal proceedings against her. 61 

As a result, Margaret Sharpies was hanged. 

Obviously, it was the rare shopkeeper who wished to see even his 
most irritating client on the gallows. Therefore decent people tended 
to avoid the courts entirely. One of the most interesting discoveries of 
Craig Muldrew's research is that the more time passed, the less true 
this became. 

Even in the late Middle Ages, in the case of really large loans, 
it was not unusual for creditors to lodge claims in local courts — but 
this was really just a way of ensuring that there was a public record 
(remember that most people at the time were illiterate). Debtors were 
willing to go along with the proceedings in part, it would seem, because 
if there was any interest being charged, it meant that if they did default, 
the lender was just as guilty in the eyes of the law as they were. Less 
than one-percent of these cases were ever brought to judgment. 62 The 
legalization of interest began to change the nature of the playing field. 
In the 1580s, when interest-bearing loans began to become common 
between villagers, creditors also began to insist on the use of signed, 
legal bonds; this led to such an explosion of appeals to the courts that 
in many small towns, almost every household seemed to be caught up 
in debt litigation of some sort or other. Only a tiny proportion of these 



suits were ever brought to judgment, either: the usual expedient was 
still to rely on the simple threat of punishment to encourage debtors 
to settle out of court. 6 ' Still, as a result, the fear of debtor's prison — or 
worse — came to hang over everyone, and sociability itself came to take 
on the color of crime. Even Mr. Coward, the kindly shopkeeper, was 
eventually laid low. His good credit itself became a problem, especially 
as he felt honor-bound to use it to help the less fortunate: 

He also dealt in merchandise with loose partners, and became 
concerned much with persons of declining circumstances, where 
neither profit nor credit could be got; and he gave uneasiness to 
his wife, by his frequenting some houses of no good character. 
And she was a very indolent woman, and drew money pri- 
vately from him, and his circumstances became so burdensome 
that he daily expected to be made a prisoner. Which, with the 
shame of forfeiting his former reputation, it drew him into de- 
spair and broke his heart, so that he kept to his house for some 
time and died of grief and shame. 64 

It is perhaps not surprising, when one consults contemporary sourc- 
es about what those prisons were like, particularly for those who were 
not of aristocratic origins. Mr. Coward would surely have known, as 
the conditions at the most notorious, like Fleet and Marshalsea, caused 
periodic scandals when exposed in parliament or the popular press, fill- 
ing the papers with stories of shackled debtors "covered with filth and 
vermin, and suffered to die, without pity, of hunger and jail fever," as 
the aristocratic roues placed in the elite side of the same jails lived lives 
of comfort, visited by manicurists and prostitutes. 65 

The criminalization of debt, then, was the criminalization of the 
very basis of human society. It cannot be overemphasized that in a 
small community, everyone normally was both lender and borrower. 
One can only imagine the tensions and temptations that must have 
existed in a communities — and communities, much though they are 
based on love, in fact, because they are based on love, will always also 
be full of hatred, rivalry and passion — when it became clear that with 
sufficiently clever scheming, manipulation, and perhaps a bit of strate- 
gic bribery, they could arrange to have almost anyone they hated im- 
prisoned or even hanged. What was it that Richard Bennett really had 
against Margaret Sharpies? We'll never know the back-story, but it's a 
pretty safe bet that there was one. The effects on communal solidarity 
must have been devastating. The sudden accessibility of violence really 
did threaten to transform what had been the essence of sociality into a 



war of all against all. 66 It's not surprising then, that by the eighteenth 
century, the very notion of personal credit had acquired a bad name, 
with both lenders and borrowers considered equally suspect. 67 The use 
of coins — at least among those who had access to them — had come to 
seem moral in itself. 

Understanding all this allows us to see some of the European authors 
considered in earlier chapters in an entirely new light. Take Panurge's 
encomium on debt: it turns out that the real joke is not the suggestion 
that debt ties communities together (any English or French peasant of 
the day would have simply assumed this), or even that only debt ties 
communities together; it is putting the sentiment in the mouth of a 
wealthy scholar who's really an inveterate criminal — that is, holding 
up popular morality as a mirror to make fun of the very upper classes 
who claimed to disapprove of it. 
Or consider Adam Smith: 

It is not from the benevolence of the butcher, the brewer, or the 
baker, that we expect our dinner, but from their regard to their 
own interest. We address ourselves, not to their humanity but 
to their self-love, and never talk to them of our own necessities 
but of their advantages. 68 

The bizarre thing here is that, at the time Smith was writing, this 
simply wasn't true. 69 Most English shopkeepers were still carrying out 
the main part of their business on credit, which meant that customers 
appealed to their benevolence all the time. Smith could hardly have 
been unaware of this. Rather, he is drawing a Utopian picture. He 
wants to imagine a world in,which everyone used cash, in part because 
he agreed with the emerging middle-class opinion that the world would 
be a better place if everyone really did conduct themselves this way, 
and avoid confusing and potentially corrupting ongoing entanglements. 
We should all just pay the money, say "please" and "thank you," and 
leave the store. What's more, he uses this Utopian image to make a 
larger point: that even if all businesses operated like the great commer- 
cial companies, with an eye only to self-interest, it wouldn't matter. 
Even the "natural selfishness and rapacity" of the rich, with all their 
"vain and insatiable desires" will still, through the logic of the invisible 
hand, lead to the benefit of all. 70 



In other words, Smith simply imagined the role of consumer credit 
in his own day, just as he had his account of the origins of money. 71 
This allowed him to ignore the role of both benevolence and malevo- 
lence in economic affairs; both the ethos of mutual aid that forms the 
necessary foundation of anything that would look like a free market 
(that is, one which is not simply created and maintained by the state), 
and the violence and sheer vindictiveness that had actually gone into 
creating the competitive, self-interested markets that he was using as 
his model. 

Nietzsche, in turn, was taking up Smith's premises, that life is 
exchange, but laying bare everything (the torture, murder, mutilation) 
that Smith preferred not to have to talk about. Now that we have seen 
just a little of the social context, it's difficult to read Nietzsche's oth- 
erwise puzzling descriptions of ancient hunters and herdsmen keeping 
accounts of debts and demanding each others' eyes and fingers without 
immediately thinking of Casimir's executioner, who actually did pres- 
ent his master with a bill for gouged eyes and severed fingers. What he 
is really describing is what it took to produce a world in which the son 
of a prosperous middle-class reverend, such as himself, could simply 
assume that all human life is premised on calculated, self-interested 

Part III: 

Impersonal Credit-money 

One reason that historians took so long to notice the elaborate popular- 
credit systems of Tudor and Stuart England is that intellectuals of the 
time spoke about money in the abstract; they rarely mentioned it. For 
the educated classes, "money" soon came to mean gold and silver. 
Most wrote as if it could be taken for granted that gold and silver had 
always been used as money for all nations in history and, presumably, 
always would be. 

This not only flew in the face of Aristotle; it directly contradicted 
the discoveries of European explorers of the time, who were finding 
shell money, bead money, feather money, salt money, and an endless 
variety of other currencies everywhere they went. 72 Yet all this just 
caused economic thinkers to dig in their heels. Some appealed to al- 
chemy to argue that the monetary status of gold and silver had a natu- 
ral basis: gold (which partook of the sun) and silver (which partook 
of the moon) were the perfected, eternal forms of metal toward which 



all baser metals tend to evolve. 7 ' Most, however, didn't feel that much 
explanation was required; the intrinsic value of precious metals was 
simply self-evident. As a result, when royal advisors or London pam- 
phleteers discussed economic problems, the issues they debated were 
always the same: How do we keep bullion from leaving the country? 
What do we do about the crippling shortage of coin? For most, ques- 
tions like "How do we maintain trust in local credit systems?" simply 
did not arise. 

This was even more extreme in Britain than on the Continent, 
where "crying up" or "crying down" the currency was still an option. 
In Britain, after a disastrous attempt at devaluation under the Tudors, 
such expedients were abandoned. Henceforth, debasement became a 
moral issue. For the government to mix base metal into the pure eter- 
nal substance of a coin was clearly wrong. So, to a lesser extent, was 
coin-clipping, a near-universal practice in England, which might be 
thought of as a kind of popular version of devaluation, since it involved 
secretly shaving silver off the edges of coins and then pressing them 
down so they seemed like they were still the original size. 

What's more, those new forms of virtual money that began to 
emerge in the new age were firmly rooted in these same assumptions. 
This is critical, because it helps explain what might otherwise seem a 
bizarre contradiction: How is it that this age of ruthless materialism, in 
which the notion that money was a social convention was definitively 
rejected, also saw the rise of paper money, along with a whole host 
of new credit instruments and forms of financial abstraction that have 
become so typical of modern capitalism? True, most of these — checks, 
bonds, stocks, annuities — had their origins in the metaphysical world 
of the Middle Ages. Yet in this new age, they underwent an enormous 

If one looks at the actual history, though, it quickly becomes clear 
that all of these new forms of money in no way undermined the as- 
sumption that money was founded on the "intrinsic" value of gold and 
silver: in fact, they reinforced it. What seems to have happened is that, 
once credit became unlatched from real relations of trust between indi- 
viduals (whether merchants or villagers), it became apparent that mon- 
ey could, in effect, be produced simply by saying it was there; but that, 
when this is done in the amoral world of a competitive marketplace, it 
would almost inevitably lead to scams and confidence games of every 
sort — causing the guardians of the system to periodically panic, and 
seek new ways to latch the value of the various forms of paper back 
onto gold and silver. 



This is the story normally told as "the origins of modern bank- 
ing." From our perspective, though, what it reveals is just how closely 
bound together war, bullion, and these new credit instruments were. 
One need only consider the paths not traveled. For instance: there was 
no intrinsic reason why a bill of exchange couldn't be endorsed over 
to a third party, then become generally transferable — thus, in effect 
turning it into a form of paper money. This is how paper money first 
emerged in China. In Medieval Europe there were periodic movements 
in that direction, but for a variety of reasons, they did not go far. 74 Al- 
ternately, bankers can produce money by issuing book credits for more 
than they have on cash reserve. This is considered the very essence of 
modern banking, and it can lead to the circulation of private bank 
notes. 75 Some moves were made in this direction as well, especially in 
Italy, but it was a risky proposition, since there was always the danger 
of depositors panicking and making a run, and most Medieval govern- 
ments threatened extremely harsh penalties on bankers unable to make 
restitution in such cases: as witnessed by the example of Francesch 
Castello, beheaded in front of his own bank in Barcelona in 1360. 76 

Where bankers effectively controlled Medieval governments, it 
proved safer and more profitable to manipulate the government's own 
finances. The history of modern financial instruments, and the ultimate 
origins of paper money, really begin with the issuing of municipal 
bonds — a practice begun by the Venetian government in the twelfth 
century when, needing a quick infusion of income for military pur- 
poses, it levied a compulsory loan on its taxpaying citizens, for which 
it promised each of them five percent annual interest, and allowed the 
"bonds" or contracts to become negotiable, thus, creating a market in 
government debt. They [the Venetian government?] tended to be quite 
meticulous about interest payments, but since the bonds had no specific 
date of maturity, their market prices often fluctuated wildly with the 
city's political and military fortunes, and so did resulting assessments 
of the likelihood that they would be able to be repaid. Similar practices 
quickly spread to the other Italian states and to northern European 
merchant enclaves as well: the United Provinces of Holland financed 
their long war of independence against the Hapsburgs (1568-1648) 
largely through a series of forced loans, though they floated numerous 
voluntary bond issues as well. 77 

Forcing taxpayers to make a loan is, in one sense, simply demand- 
ing that they pay their taxes early; but when the Venetian state first 
agreed to pay interest — and in legal terms, this was again interesse, a 
penalty for late payment — it was in principle penalizing itself for not 
immediately giving the money back. It's easy to see how this might 



raise all sorts of questions about the legal and moral relation between 
people and government. Ultimately, the commercial classes in those 
mercantile republics that pioneered these new forms of financing did 
end up seeing themselves as owning the government more than they 
saw themselves as being in its debt. Not only the commercial classes: 
by 1650, a majority of Dutch households held at least a little govern- 
ment debt. 78 However, the true paradox only appears when one begins 
to "monetize" this debt — that is, to take government promises to pay 
and allow them to circulate as currency. 

While already by the sixteenth century, merchants were using bills 
of exchange to settle debts, government debt bonds — rentes, juros, 
annuities — were the real credit money of the new age. It's here that we 
have to look for the real origins of the "price revolution" that ham- 
mered once-independent townsfolk and villagers into the ground and 
opened the way for most of them to ultimately be reduced to wage 
laborers, working for those who had access to these higher forms of 
credit. Even in Seville, where the treasure fleets from the New World 
first touched port in the Old, bullion was not much used in day-to-day 
transactions. Most of it was taken directly to the warehouses of Geno- 
ese bankers operating from the port and stored for shipment east. But 
in the process, it became the basis for complex credit schemes whereby 
the value of the bullion was loaned to the emperor to fund military op- 
erations, in exchange for papers entitling the bearer to interest-bearing 
annuities from the government — papers that could in turn be traded 
as if they were money. By such means, bankers could almost end- 
lessly multiply the actual value of gold and silver they held. Already in 
the 1570s, we hear of fairs in places like Medina del Campo, not far 
from Seville, that had become "veritable factories of certificates," with 
transactions carried out exclusively through paper. 79 Since whether the 
Spanish government would actually pay their debts, or how regularly, 
were always slightly uncertain, the bills would tend to circulate at a 
discount — especially as juros began circulating throughout the rest of 
Europe — causing continual inflation. 80 

It was only with the creation of the Bank of England in 1694 that 
one can speak of genuine paper money, since its banknotes were in no 
sense bonds. They were rooted, like all the others, in the king's war 
debts. This can't be emphasized enough. The fact that money was no 
longer a debt owed to the king, but a debt owed by the king, made it 
very different than what it had been before. In many ways it had be- 
come a mirror image of older forms of money. 

The reader will recall that the Bank of England was created when a 
consortium of forty London and Edinburgh merchants — mostly already 



creditors to the crown — offered King William III a £1.2 million loan to 
help finance his war against France. In doing so, they also convinced 
him to allow them in return to form a corporation with a monopoly 
on the issuance of banknotes — which were, in effect, promissory notes 
for the money the king now owed them. This was the first independent 
national central bank, and it became the clearinghouse for debts owed 
between smaller banks; the notes soon developed into the first Euro- 
pean national paper currency. Yet the great public debate of the time, a 
debate about the very nature of money, was about not paper but metal. 
The 1690s were a time of crisis for British coinage. The value of silver 
had risen so high that new British coins (the mint had recently devel- 
oped the "milled edge" familiar from coins nowadays, which made 
them clip-proof) were actually worth less than their silver content, with 
predictable results. Proper silver coins vanished; all that remained in 
circulation were the old clipped ones, and these were becoming increas- 
ingly scarce. Something had to be done. A war of pamphlets ensued, 
which came to a head in 1695, one year after the founding of the bank. 
Charles Davenant's essay on credit, which I've already cited, was ac- 
tually part of this particular pamphlet-war: he proposed that Britain 
move to a pure credit money based on public trust, and he was ignored. 
The Treasury proposed to call in the coinage and reissue it at a 20- to 
25-percent lower weight, so as to bring it back below the market price 
for silver. Many who supported this position took explicitly Chartalist 
positions, insisting that silver has no intrinsic value anyway, and that 
money is simply a measure established by the state. 8 ' The man who 
won the argument, however, was John Locke, the Liberal philosopher, 
at that time acting as advisor to Sir Isaac Newton, then Warden of the 
Mint. Locke insisted that one can no more make a small piece of silver 
worth more by relabeling it a "shilling" than one can make a short 
man taller by declaring there are now fifteen inches in a foot. Gold and 
silver had a value recognized by everyone on earth; the government 
stamp simply attested to the weight and purity of a coin, and — as he 
added in words veritably shivering with indignation — for governments 
to tamper with this for their own advantage was just as criminal as the 
coin-clippers themselves: 

The use and end of the public stamp is only to be a guard and 
voucher of the quality of silver which men contract for; and the 
injury done to the public faith, in this point, is that which in 
clipping and false coining heightens the robbery into treason.* 1 



Therefore, he argued, the only recourse was to recall the currency 
and restrike it at exactly the same value that it had before. 

This was done, and the results were disastrous. In the years im- 
mediately following, there was almost no coinage in circulation; prices 
and wages collapsed; there was hunger and unrest. Only the wealthy 
were insulated, since they were able to take advantage of the new credit 
money, trading back and forth portions of the king's debt in the form 
of banknotes. The value of these notes, too, fluctuated a bit at first, 
but eventually stabilized once they were made redeemable in precious 
metals. For the rest, the situation only really improved once paper 
money, and, eventually, smaller-denomination currency, became more 
widely available. The reforms proceeded top-down, and very slowly, 
but they did proceed, and they gradually came to create the world 
where even ordinary, everyday transactions with butchers and bakers 
were carried out in polite, impersonal terms, with small change, and 
therefore it became possible to imagine everyday life itself as a matter 
of self-interested calculation. 

It's easy enough to see why Locke would adopt the position that he 
did. He was a scientific materialist. For him, "faith" in government — 
as in the quote above — was not the citizens' belief that the govern- 
ment will keep its promises, but simply that it won't lie to them; that 
it would, like a good scientist, give them accurate information, and 
who wanted to see human behavior as founded in natural laws that — 
like the laws of physics that Newton had so recently described — were 
higher than those of any mere government. The real question is why 
the British government agreed with him and resolutely stuck to this 
position despite all the immediate disasters. Soon afterward, in fact, 
Britain adopted the gold standard (in 1717) and the British Empire 
maintained it, and with it the notion that gold and silver were money, 
down to its final days. 

True, Locke's materialism also came to be broadly accepted — even 
to be the watchword of the age. 83 Mainly, though, the reliance on gold 
and silver seemed to provide the only check on the dangers involved 
with the new forms of credit-money, which multiplied very quickly — 
especially once ordinary banks were allowed to create money too. It 
soon became apparent that financial speculation, unmoored from any 
legal or community constraints, was capable of producing results that 
seemed to verge on insanity. The Dutch Republic, which pioneered 
the development of stock markets, had already experienced this in 
the tulip mania of 1637 — the first of a series of speculative "bubbles," 
as they came to be known, in which future prices would first be bid 
through the ceiling by investors and then collapse. A whole series of 



such bubbles hit the London markets in the 1690s, in almost every 
case built around a new joint-stock corporation formed, in imitation 
of the East India Company, around some prospective colonial venture. 
The famous South Sea Bubble in 1720 — in which a newly formed trad- 
ing company, granted a monopoly of trade with the Spanish colonies, 
bought up a considerable portion of the British national debt and saw 
its shares briefly skyrocket before collapsing in ignominy — was only 
the culmination. Its collapse was followed the next year by the collapse 
of John Law's famous Banque Royale in France, another central-bank 
experiment — similar to the Bank of England — that grew so quickly 
that within a few years it had absorbed all the French colonial trading 
companies, and most of the French crown's own debt, issuing its own 
paper money, before crashing into nothingness in 1721, sending its chief 
executive fleeing for his life. In each case, this was followed by legisla- 
tion: in Britain, to forbid the creation of new joint-stock companies 
(other than for the building of turnpikes and canals), and in France, to 
eliminate paper money based in government debt entirely. 

It's unsurprising, then, that Newtonian economics (if we may call 
it that) — the assumption that one cannot simply create money, or even, 
really, tinker with it — came to be accepted by almost everyone. There 
had to be some solid, material foundation to all this, or the entire sys- 
tem would go insane. True, economists were to spend centuries arguing 
about what that foundation might be (was it really gold, or was it land, 
human labor, the utility or desirability of commodities in general?) but 
almost no one returned to anything like the Aristotelian view. 

Another way to look at this might be to say that the new age came 
to be increasingly uncomfortable with the political nature of money. 
Politics, after all, is the art of persuasion; the political is that dimension 
of social life in which things really do become true if enough people 
believe them. The problem is that in order to play the game effectively, 
one can never acknowledge this: it may be true that, if I could con- 
vince everyone in the world that I was the King of France, I would in 
fact become the King of France; but it would never work if I were to 
admit that this was the only basis of my claim. In this sense, politics 
is very similar to magic — one reason both politics and magic tend, just 
about everywhere, to be surrounded by a certain halo of fraud. These 
suspicions were widely vaunted at the time. In 1711, the satirical essayist 
Joseph Addison penned a little fantasy about the Bank of England's — 
and as a result, the British monetary system's — dependence on public 



faith in the political stability of the throne. (The Act of Settlement of 
1701 was the bill that guaranteed the royal succession, and a sponge 
was a popular symbol for default). In a dream, he said, 

I saw Public Credit, set on her throne in the Grocer's Hall, the 
Great Charter over her head, the Act of Settlement full in her 
view. Her touch turned everything to gold. Behind her seat, 
bags filled with coin were piled up to the ceiling. On her right 
the door flies open. The Pretender rushes in, a sponge in one 
hand, and in the other a sword, which he shakes at the Act of 
Settlement. The beautiful Queen sinks down fainting. The spell 
by which she has turned all things around her into treasure 
is broken. The money bags shrink like pricked bladders. The 
piles of gold pieces are turned into bundles of rags or faggots 
of wooden tallies. 84 

If one does not believe in the king, then the money vanishes 
with him. 

Thus kings, magicians, markets, and alchemists all fused in the 
public imagination during this era, and we still talk about the "alche- 
my" of the market, or "financial magicians." In Goethe's Faust (1808), 
he actually has his hero — in his capacity as alchemist-magician — pay a 
visit to the Holy Roman Emperor. The Emperor is sinking under the 
weight of endless debts that he has piled up paying for the extravagant 
pleasures of his court. Faust, and his assistant, Mephistopheles, con- 
vince him that he can pay off his creditors by creating paper money. 
It's represented as an act of pure prestidigitation. "You have plenty of 
gold lying somewhere underneath your lands," notes Faust. "Just issue 
notes promising your creditors you'll give it to them later. Since no one 
knows how much gold there really is, there's no limit to how much 
you can promise." 85 

This kind of magical language almost never appears in the Middle 
Ages. 86 It would appear that it's only in a resolutely materialist age 
that this ability to simply produce things by saying that they are there 
comes to be seen as a scandalous, even diabolical. And the surest sign 
that one has entered such a materialist age is precisely the fact that it 
is seen so. We have already observed Rabelais, at the very beginning 
of the age, reverting to language almost identical to that used by Plu- 
tarch when he railed against moneylenders in Roman times — "laughing 
at those natural philosophers who hold that nothing can be made of 
nothing," as they manipulate their books and ledgers to demand back 
money they never actually had. Panurge just turned it around: no, it's 



by borrowing that I make something out of nothing, and become a 
kind of god. 

But consider the following lines, often attributed to Lord Josiah 
Charles Stamp, director of the Bank of England: 

The modern banking system manufactures money out of noth- 
ing. The process is perhaps the most astounding piece of sleight 
of hand that was ever invented. Banking was conceived in in- 
iquity and born in sin. Bankers own the earth; take it away 
from them, but leave them with the power to create credit, and 
with the stroke of a pen they will create enough money to buy 
it back again ... If you wish to remain slaves of Bankers, and 
pay the cost of your own slavery, let them continue to create 
deposits. 87 

It seems extremely unlikely that Lord Stamp ever really said this, but 
the passage has been cited endlessly — in fact, it's probably the sin- 
gle most often-quoted passage by critics of the modern banking sys- 
tem. However apocryphal, it clearly strikes a chord, and apparently 
for the same reason: bankers are creating something out of nothing. 
They are not only frauds and magicians. They are evil, because they're 
playing God. 

But there's a deeper scandal than mere prestidigitation. If Medieval 
moralists did not raise such objections, it was not just because they 
were comfortable with metaphysical entities. They had a much more 
fundamental problem with the market: greed. Market motives were 
held to be inherently corrupt. The moment that greed was validated, 
and unlimited profit was considered a perfectly viable end in itself, this 
political, magical element became a genuine problem, because it meant 
that even those actors — the brokers, stock-jobbers, traders — who ef- 
fectively made the system run had no convincing loyalty to anything, 
even to the system itself. 

Hobbes, who first developed this vision of human nature into an 
explicit theory of society, was well aware of this greed dilemma. It 
formed the basis of his political philosophy. Even, he argued, if we are 
all rational enough to understand that it's in our long-term interest to 
live in peace and security, our short-term interests are often such that 
killing and plundering are the most obviously profitable courses to 
take, and all it takes is a few to cast aside their scruples to create utter 
insecurity and chaos. This was why he felt that markets could only ex- 
ist under the aegis of an absolutist state, which would force us to keep 
our promises and respect one another's property. But what happens 



when we're talking about a market in which it is state debts and state 
obligations themselves that are being traded; when one cannot really 
speak of a state monopoly on force because one is operating in an in- 
ternational market where the primary currency is bonds that the state 
depends on for its very ability to marshal military force? 

Having made incessant war on all remaining forms of the commu- 
nism of the poor, even to the point of criminalizing credit, the masters 
of the new market system discovered that they had no obvious justi- 
fication left to maintain even the communism of the rich — that level 
of cooperation and solidarity required to keep the economic system 
running. True, for all its endless strains and periodic breakdowns, the 
system has held out so far. But as recent events have dramatically testi- 
fied, it has never been resolved. 

Part IV: 

So What Is Capitalism, Anyway? 

We are used to seeing modern capitalism (along with modern tradi- 
tions of democratic government) as emerging only later: with the Age 
of Revolutions — the industrial revolution, the American and French 
revolutions — a series of profound breaks at the end of the eighteenth 
century that only became fully institutionalized after the end of the Na- 
poleonic Wars. Here we come face to face with a peculiar paradox. It 
would seem that almost all elements of financial apparatus that we've 
come to associate with capitalism — central banks, bond markets, short- 
selling, brokerage houses, speculative bubbles, securization, annuities — 
came into being not only before the science of economics (which is per- 
haps not too surprising), but also before the rise of factories, and wage 
labor itself. 88 This is a genuine challenge to familiar ways of thinking. 
We like to think of the factories and workshops as the "real economy," 
and the rest as superstructure, constructed on top of it. But if this were 
really so, then how can it be that the superstructure came first? Can the 
dreams of the system create its body? 

All this raises the question of what "capitalism" is to begin with, 
a question on which there is no consensus at all. The word was origi- 
nally invented by socialists, who saw capitalism as that system where- 
by those who own capital command the labor of those who do not. 
Proponents, in contrast, tend to see capitalism as the freedom of the 
marketplace, which allows those with potentially marketable visions 
to pull resources together to bring those visions into being. Just about 



everyone agrees, however, that capitalism is a system that demands 
constant, endless growth. Enterprises have to grow in order to remain 
viable. The same is true of nations. Just as five percent per annum was 
widely accepted, at the dawn of capitalism, as the legitimate commer- 
cial rate of interest — that is, the amount that any investor could nor- 
mally expect her money to be growing by the principle of interesse — so 
is five percent now the annual rate at which any nation's GDP really 
ought to grow. What was once an impersonal mechanism that com- 
pelled people to look at everything around them as a potential source 
of profit has come to be considered the only objective measure of the 
health of the human community itself. 

Starting from our baseline date of 1700, then, what we see at the 
dawn of modern capitalism is a gigantic financial apparatus of credit 
and debt that operates — in practical effect — to pump more and more 
labor out of just about everyone with whom it comes into contact, 
and as a result produces an endlessly expanding volume of material 
goods. It does so not just by moral compulsion, but above all by using 
moral compulsion to mobilize sheer physical force. At every point, the 
familiar but peculiarly European entanglement of war and commerce 
reappears — often in startling new forms. The first stock markets in Hol- 
land and Britain were based mainly in trading shares of the East and 
West India companies, which were both military and trading ventures. 
For a century, one such private, profit-seeking corporation governed In- 
dia. The national debts of England, France, and the others were based 
in money borrowed not to dig canals and erect bridges, but to acquire 
the gunpowder needed to bombard cities and to construct the camps 
required for the holding of prisoners and the training of recruits. Almost 
all the bubbles of the eighteenth century involved some fantastic scheme 
to use the proceeds of colonial ventures to pay for European wars. Paper 
money was debt money, and debt money was war money, and this has 
always remained the case. Those who financed Europe's endless military 
conflicts also employed the government's police and prisons to extract 
ever-increasing productivity from the rest of the population. 

As everybody knows, the world market system initiated by the 
Spaniards and Portuguese empires first arose in the search for spices. It 
soon settled into three broad trades, which might be labeled the arms 
trade, the slave trade, and the drug trade. The last refers mostly to soft 
drugs, of course, like coffee, tea, and the sugar to put in them, and 
tobacco, but distilled liquor first appears at this stage of human history 
as well, and as we all know, Europeans had no compunctions about 
aggressively marketing opium in China as a way of finally putting an 
end to the need to export bullion. The cloth trade only came later, after 



the East India Company used military force to shut down the (more 
efficient) Indian cotton export trade. One need only take a glance at the 
book that preserves Charles Davenant's 1696 essay on credit and hu- 
man fellowship: The political and commercial works of that celebrated 
writer Charles D' Avenant: relating to the trade and revenue of England, 
the Plantation trade, the East-India trade and African trade. "Obedience, 
love, and friendship" might suffice to govern relations between fellow 
Englishmen, then, but in the colonies, it was mainly just obedience. 

As I've described, the Atlantic slave trade can be imagined as a 
giant chain of debt-obligations, stretching from Bristol to Calabar to 
the headwaters of the Cross River, where the Aro traders sponsored 
their secret societies; just as in the Indian Ocean trade, similar chains 
connected Utrecht to Capetown to Jakarta to the Kingdom of Gelgel, 
where Balinese kings arranged their cockfights to lure their own sub- 
jects to gamble their freedom away. In either case, the end product was 
the same: human beings so entirely ripped from their contexts, and 
hence so thoroughly dehumanized, that they were placed outside the 
realm of debt entirely. 

The middlemen in these chains, the various commercial links of 
the debt chain that connected the stock-jobbers in London with the 
Aro priests in Nigeria, pearl divers in the Aru islands of Eastern Indo- 
nesia, Bengali tea plantations, or Amazonian rubber-tappers, give one 
the impression of having been sober, calculating, unimaginative men. 
At either end of the debt chain, the whole enterprise seemed to turn 
on the ability to manipulate fantasies, and to run a constant peril of 
slipping into what even contemporary observers considered varieties of 
phantasmagoric madness. On the one end were the periodic bubbles, 
propelled in part by rumor and fantasy and in part by the fact that just 
about everyone in cities like Paris and London with any disposable cash 
would suddenly become convinced that they would somehow be able 
to profit from the fact that everyone else was succumbing to rumor 
and fantasy. 

Charles MacKay has left us some immortal descriptions of the first 
of these, the famous "South Sea Bubble" of 1710. Actually, the South 
Sea Company itself (which grew so large that at one point it bought up 
most of the national debt) was just the anchor for what happened, a 
giant corporation, its stock constantly ballooning in value, that seemed, 
to put it in contemporary terms, "too big to fail." It soon became the 
model for hundreds of new start-up offerings: 

Innumerable joint-stock companies started up everywhere. 
They soon received the name Bubbles, the most appropriate 



imagination could devise . . . Some of them lasted a week or a 
fortnight, and were no more heard of, while others could not 
even live out that span of existence. Every evening produced 
new schemes, and every morning new projects. The highest of 
the aristocracy were as eager in this hot pursuit of gain as the 
most plodding jobber in Cornhill. 89 

The author lists, as arbitrary examples, eighty-six schemes, ranging 
from the manufacture of soap or sailcloth, the provision of insurance 
for horses, to a method to "make deal-boards out of sawdust." Each 
issued stock; each issue would appear, then be scooped up and avidly 
traded back and forth in taverns, coffee-houses, alleys, and haberdash- 
eries across the city. In every case their price was quickly bid through 
the ceiling — each new buyer betting, effectively, that he or she could 
unload them to some even more gullible sucker before the inevitable 
collapse. Sometimes people bid on cards and coupons that would allow 
them no more than the right to bid on other shares later. Thousands 
grew rich. Thousands more were ruined. 

The most absurd and preposterous of all, and which shewed, 
more completely than any other, the utter madness of the peo- 
ple, was one started by an unknown adventurer, entitled "A 
company for the carrying on of an undertaking of great advan- 
tage, but nobody to know what it is." 

The man of genius who essayed this bold and successful in- 
road upon public credulity merely stated in his prospectus that 
the required capital was half a million, in five thousand shares 
of iool. each, deposit 2I. per share. Each subscriber, paying 
his deposit, would be entitled to iool. per annum per share. 
How this immense profit was to be obtained, he would not 
condescend to inform them at that time, but promised that in 
a month the full particulars would be duly announced, and call 
made for the remaining 98I. of the subscription. Next morning, 
at nine o'clock, this great man opened an office in Cornhill. 
Crowds beset his door, and when he shut up at three o'clock, 
he found that no less than one thousand shares had been sub- 
scribed for, and the deposits paid. 

He was philosopher enough to be contented with his ven- 
ture, and set off that same evening for the Continent. He was 
never heard of again. 90 

If one is to believe MacKay, the entire population of London 
conceived the simultaneous delusion, not that money could really 



be manufactured out of nothing, but that other people were foolish 
enough to believe that it could — and that, by that very fact, they actu- 
ally could make money out of nothing after all. 

Moving to the other side of the debt chain, we find fantasies rang- 
ing from the charming to the apocalyptic. In the anthropological lit- 
erature, there is everything from the beautiful "sea wives" of Aru pearl 
divers, who will not yield up the treasures of the ocean unless courted 
with gifts bought on credit from local Chinese shops, 91 to the secret 
markets where Bengali landlords purchase ghosts to terrorize insubor- 
dinate debt peons; to Tiv flesh-debts, a fantasy of human society canni- 
balizing itself; to finally, occasions at which, the Tiv nightmare appears 
to have very nearly become true. 92 One the most famous and disturbing 
was the great Putumayo scandal of 1909-1911, in which the London 
reading public was shocked to discover that the agents of the subsid- 
iary of a British rubber company operating in the Peruvian rainforest 
had created their very own Heart of Darkness, exterminating tens of 
thousands of Huitoto Indians — who the agents insisted on referring to 
only as "cannibals" — in scenes of rape, torture, and mutilation that 
recalled the very worst of the conquest four hundred years earlier. 93 

In the debates that followed, the first impulse was to blame every- 
thing on a system whereby the Indians were said to have been caught 
in a debt trap, made completely dependent on the company store: 

The root of the whole evil was the so called patron or "peon- 
age" system — a variety of what used to be called in England 
the "truck system" — by which the employee, forced to buy all 
his supplies at the employer's store, is kept hopelessly in debt, 
while by law he is unable to leave his employment until his 
debt is paid . . . The peon is thus, as often as not, a de facto 
slave; and since in the remoter regions of the vast continent 
there is no effective government, he is wholly at the mercy of 
his master. 94 

The "cannibals" who ended up flogged to death, crucified, tied 
up and used for target practice, or hacked to pieces with machetes for 
failure to bring in sufficient quantities of rubber, had, the story went, 
fallen into the ultimate debt trap; seduced by the wares of the com- 
pany's agents, they'd ended up bartering away their very lives. 

A later Parliamentary inquiry discovered that the real story was 
nothing of the sort. The Huitoto had not been tricked into becoming 
debt peons at all. It was the agents and overseers sent into the region 
who were, much like the conquistadors, deeply indebted — in their case, 



to the Peruvian company that had commissioned them, which was ul- 
timately receiving its own credit from London financiers. These agents 
had certainly arrived with every intention of extending that web of 
credit to include the Indians, but discovering the Huitoto to have no 
interest in the cloth, machetes, and coins they had brought to trade 
with them, they'd finally given up and just started rounding Indians 
up and forcing them to accept loans at gunpoint, then tabulating the 
amount of rubber they owed. 95 Many of the Indians massacred, in turn, 
had simply been trying to run away. 

In reality, then, the Indians had been reduced to slavery; it's just 
that, by 1907, no one could openly admit this. A legitimate enterprise 
had to have some moral basis, and the only morality the company 
knew was debt. When it became clear that the Huitoto rejected the 
premise, everything went haywire, and the company ended up, like Ca- 
simir, caught in a spiral of indignant terror that ultimately threatened 
to wipe out its very economic basis. 

It is the secret scandal of capitalism that at no point has it been or- 
ganized primarily around free labor. 96 The conquest of the Americas 
began with mass enslavement, then gradually settled into various forms 
of debt peonage, African slavery, and "indentured service" — that is, 
the use of contract labor, workers who had received cash in advance 
and were thus bound for five-, seven-, or ten-year terms to pay it 
back. Needless to say, indentured servants were recruited largely from 
among people who were already debtors. In the 1600s there were at 
times almost as many white debtors as African slaves working in 
southern plantations, and legally they were at first in almost the same 
situation, since in the beginning, plantation societies were working 
within a European legal tradition that assumed slavery did not exist, 
so even Africans in the Carolinas were classified, as contract laborers. 97 
Of course this later changed when the idea of "race" was introduced. 
When African slaves were freed, they were replaced, on plantations 
from Barbados to Mauritius, with contract laborers again: though now 
ones recruited mainly in India or China. Chinese contract laborers 
built the North American railroad system, and Indian "coolies" built 
the South African mines. The peasants of Russia and Poland, who had 
been free landholders in the Middle Ages, were only made serfs at the 
dawn of capitalism, when their lords began to sell grain on the new 
world market to feed the new industrial cities to the west. 98 Colonial 
regimes in Africa and Southeast Asia regularly demanded forced labor 



from their conquered subjects, or, alternately, created tax systems de- 
signed to force the population into the labor market through debt. 
British overlords in India, starting with the East India Company but 
continuing under Her Majesty's government, institutionalized debt pe- 
onage as their primary means of creating products for sale abroad. 

This is a scandal not just because the system occasionally goes 
haywire, as it did in the Putumayo, but because it plays havoc with 
our most cherished assumptions about what capitalism really is — 
particularly that, in its basic nature, capitalism has something to do 
with freedom. For the capitalists, this means the freedom of the mar- 
ketplace. For most workers, it means free labor. Marxists have ques- 
tioned whether wage labor is ultimately free in any sense (since some- 
one with nothing to sell but his or her body cannot in any sense be 
considered a genuinely free agent), but they still tend to assume that 
free wage labor is the basis of capitalism. And the dominant image in 
the history of capitalism is the English workingman toiling in the facto- 
ries of the industrial revolution, and this image can be traced forward 
to Silicon Valley, with a straight line in between. All those millions of 
slaves and serfs and coolies and debt peons disappear, or if we must 
speak of them, we write them off as temporary bumps along the road. 
Like sweatshops, this is assumed to be a stage that industrializing na- 
tions had to pass through, just as it is still assumed that all those mil- 
lions of debt peons and contract laborers and sweatshop workers who 
still exist, often in the same places, will surely live to see their children 
become regular wage laborers with health insurance and pensions, and 
their children, doctors and lawyers and entrepreneurs. 

When one looks at the actual history of wage labor, even in coun- 
tries like England, that picture begins to melt away. In most of Medieval 
northern Europe, wage labor had been mainly a lifestyle phenomenon. 
From roughly the age of twelve or fourteen to roughly twenty-eight or 
thirty, everyone was expected to be employed as a servant in someone 
else's household — usually on a yearly contract basis, for which they re- 
ceived room, board, professional training, and usually a wage of some 
sort — until they accumulated enough resources to marry and set up a 
household of their own." The first thing that "proletarianization" came 
to mean was that millions of young men and women across Europe 
found themselves effectively stuck in a kind of permanent adolescence. 
Apprentices and journeymen could never become "masters," and thus, 
never actually grow up. Eventually, many began to give up and marry 
early — to the great scandal of the moralists, who insisted that the new 
proletariat were starting families they could not possibly support. 100 



There is, and has always been, a curious affinity between wage 
labor and slavery. This is not just because it was slaves on Carib- 
bean sugar plantations who supplied the quick-energy products that 
powered much of early wage laborers' work; not just because most 
of the scientific management techniques applied in factories in the in- 
dustrial revolution can be traced back to those sugar plantations; but 
also because both the relation between master and slave, and between 
employer and employee, are in principle impersonal: whether you've 
been sold or you're simply rented yourself out, the moment money 
changes hands, who you are is supposed to be unimportant; all that's 
important is that you are capable of understanding orders and doing 
what you're told. 101 

This is one reason, perhaps, that in principle, there was always a 
feeling that both the buying of slaves and the hiring of laborers should 
really not be on credit, but should employ cash. The problem, as 
I've noted, was that for most of the history of British capitalism, the 
cash simply didn't exist. Even when the Royal Mint began to produce 
smaller-denomination silver and copper coins, the supply was sporadic 
and inadequate. This is how the "truck system" developed to begin 
with: during the industrial revolution, factory owners would often pay 
their workers with tickets or vouchers good only in local shops, with 
whose owners they had some sort of informal arrangement, or, in more 
isolated parts of the country, which they owned themselves. 102 Tradi- 
tional credit relations with one's local shopkeeper clearly took on an 
entirely new complexion once the shopkeeper was effectively an agent 
of the boss. Another expedient was to pay workers at least partly in 
kind — and notice the very richness of the vocabulary for the sorts of 
things one was assumed to be allowed to appropriate from one's work- 
place, particularly from the waste, excess, and side products: cabbage, 
chips, thrums, sweepings, buggings, gleanings, sweepings, potchings, 
vails, poake, coltage, knockdowns, tinge. 103 "Cabbage," for instance, 
was the cloth left over from tailoring, "chips" the pieces of board that 
dockworkers had the right to carry from their workplace (any piece of 
timber less than two feet long), "thrums" were taken from the warping- 
bars of looms, and so on. And of course we have already heard about 
payment in the form of cod, or nails. 

Employers had a final expedient: wait for the money to show up, 
and in the meantime, don't pay anything — leaving their employees to 
get by with only what they could scrounge from their shop floors, or 
what their families could finagle in outside employment, receive in 
charity, preserve in savings pools with friends and families, or, when 
all else failed, acquire on credit from the loan sharks and pawnbrokers 
who rapidly came to be seen as the perennial scourge of the working 



poor. The situation became such that, by the nineteenth century, any 
time a fire destroyed a London pawnshop, working-class neighbor- 
hoods would brace for the wave of domestic violence that would in- 
evitably ensue when many a wife was forced to confess that she'd long 
since secretly hocked her husband's Sunday suit. 104 

We are, nowadays, used to associating factories eighteen months in 
arrears for wages with a nation in economic free-fall, such as occurred 
during the collapse of the Soviet Union; but owing to the hard-money 
policies of the British government, who were always concerned above 
all to ensure that their paper money didn't float away in another specu- 
lative bubble, in the early days of industrial capitalism, such a situation 
was in no way unusual. Even the government was often unable to find 
the cash to pay its own employees. In eighteenth-century London, the 
Royal Admiralty was regularly over a year behind in paying the wages 
of those who labored at the Deptford docks — one reason that they were 
willing to tolerate the appropriation of chips, not to mention hemp, 
canvas, steel bolts, and cordage. In fact, as Linebaugh has shown, the 
situation only really began to take recognizable form around 1800, 
when the government stabilized its finances, began paying cash wages 
on schedule, and therefore tried to abolish the practice of what was 
now relabeled "workplace pilfering" — which, meeting outraged resis- 
tance on the part of the dockworkers, was made punishable by whip- 
ping and imprisonment. Samuel Bentham, the engineer put in charge of 
reforming the dockyards, had to turn them into a regular police state 
in order to be able to institute a regime of pure wage labor — to which 
purpose he ultimately conceived the notion of building a giant tower 
in the middle to guarantee constant surveillance, an idea that was later 
borrowed by his brother Jeremy for the famous Panopticon. 105 

Men like Smith and Bentham were idealists; even Utopians. To under- 
stand the history of capitalism, however, we have to begin by realizing 
that the picture we have in our heads, of workers who dutifully punch 
the clock at 8:00 a.m. and receive regular remuneration every Friday, 
on the basis of a temporary contract that either party is free to break 
off at any time, began as a Utopian vision, was only gradually put 
into effect even in England and North America, and has never, at any 
point, been the main way of organizing production for the market, 
ever, anywhere. 

This is actually why Smith's work is so important. He created the 
vision of an imaginary world almost entirely free of debt and credit, 



and therefore, free of guilt and sin; a world where men and women 
were free to simply calculate their interests in full knowledge that ev- 
erything had been prearranged by God to ensure that it will serve the 
greater good. Such imaginary constructs are of course what scientists 
refer to as "models," and there's nothing intrinsically wrong with them. 
Actually I think a fair case can be made that we cannot think without 
them. The problem with such models — at least, it always seems to 
happen when we model something called "the market" — is that, once 
created, we have a tendency to treat them as objective realities, or even 
fall down before them and start worshipping them as gods. "We must 
obey the dictates of the market!" 

Karl Marx, who knew quite a bit about the human tendency to 
fall down and worship our own creations, wrote Das Capital in an 
attempt to demonstrate that, even if we do start from the economists' 
Utopian vision, so long as we also allow some people to control pro- 
ductive capital, and, again, leave others with nothing to sell but their 
brains and bodies, the results will be in many ways barely distinguish- 
able from slavery, and the whole system will eventually destroy itself. 
What everyone seems to forget is the "as if" nature of his analysis. 106 
Marx was well aware that there were far more bootblacks, prostitutes, 
butlers, soldiers, pedlars, chimneysweeps, flower girls, street musicians, 
convicts, nannies, and cab drivers in the London of his day than there 
were factory workers. He was never suggesting that that's what the 
world was actually like. 

Still, if there is anything that the last several hundred years of 
world history have shown, it's that Utopian visions can have a certain 
appeal. This is as true of Adam Smith's as of those ranged against it. 
The period from roughly 1825 to 1975 is a brief but determined effort 
on the part of a large number of very powerful people — with the avid 
support of many of the least powerful — to try to turn that vision into 
something like reality. Coins and paper money were, finally, produced 
in sufficient quantities that even ordinary people could conduct their 
daily lives without appeal to tickets, tokens, or credit. Wages started to 
be paid on time. New sorts of shops, arcades, and galleries appeared, 
where everyone paid in cash, or alternately, as time went on, by means 
of impersonal forms of credit like installment plans. As a result, the 
old puritanical notion that debt was sin and degradation began to take 
a profound hold on many of those who came to consider themselves 
the "respectable" working classes, who often took freedom from the 
clutches of the pawnbroker and loan shark as a point of pride, which 
separated them from drunkards, hustlers, and ditch-diggers as surely as 
the fact that they weren't missing teeth. 



Speaking as someone brought up in that sort of working-class fam- 
ily (my brother died at the age of 53, having refused to his dying day 
to acquire a credit card), I can attest to the degree that, for those who 
spend most of their waking hours working at someone else's orders, 
the ability to pull out a wallet full of banknotes that are uncondition- 
ally one's own can be a compelling form of freedom. It's not surprising 
that so many of the economists' assumptions — most of those for which 
I have been taking them to task over the course of this book — have 
been embraced by the leaders of the historic workers' movements, so 
much so that they have come to shape our visions of what alternatives 
to capitalism might be like. The problem is not just — as I demonstrated 
in chapter 7 — that it is rooted in a deeply flawed, even perverse, con- 
ception of human freedom. The real problem is that, like all Utopian 
dreams, it is impossible. We could no more have a universal world 
market than we could have a system in which everyone who wasn't a 
capitalist was somehow able to become a respectable, regularly paid 
wage laborer with access to adequate dental care. A world like that 
has never existed and never could exist. What's more, the moment that 
even the prospect that this might happen begins to materialize, the 
whole system starts to come apart. 

Part IV: 

Let us return, finally, to where we began: with Cortes and the Aztec 
treasure. The reader might have asked herself, What did happen to it? 
Did Cortes really steal it from his own men? 

The answer seems to be that by the time the siege was over, there 
was very little of it left. Cortes seems to have gotten his hands on much 
of it long before the siege even began. A certain portion he had won 
by gambling. 

This story, too, is in Bernal Diaz, and it is strange and puzzling, 
but also, I suspect, profound. Let me fill in some of the gaps in our 
story. After burning his boats, Cortes began to assemble an army of lo- 
cal allies, which was easy to do because the Aztecs were widely hated, 
and then he began to march on the Aztec capital. Moctezuma, the Az- 
tec emperor, who had been monitoring the situation closely, concluded 
that he needed to at least figure out what sort of people he was dealing 
with, so he invited the entire Spanish force (only a few hundred men) 
to be his official guests in Tenochtitlan. This eventually led to a series 



of palace intrigues during which Cortes's men briefly held the emperor 
hostage before being forcibly expelled. 

During the time when Moctezuma was being held captive in his 
own palace, he and Cortes passed a good deal of their time playing 
an Aztec game called totoloque. They played for gold, and Cortes, of 
course, cheated. At one point, Moctezuma's men brought the matter 
to the king's attention, but the king just laughed and made a joke of 
it — neither was he concerned later when Pedro de Alvarado, Cortes's 
chief lieutenant, began cheating even more flagrantly, demanding gold 
for each point lost and when he lost, paying only in worthless pebbles. 
Why Moctezuma behaved so has remained something of an historical 
mystery. Diaz took it as a gesture of lordly magnanimity, perhaps even 
a way of putting the petty-minded Spaniards in their place. 107 

One historian, Inga Clenninden, suggests an alternate interpreta- 
tion. Aztec games, she notes, tended to have a peculiar feature: there 
was always a way that, by a freak stroke of luck, one could achieve to- 
tal victory. This seems to have been true, for instance, of their famous 
ball games. Observers always wonder, viewing the tiny stone hoops set 
high above the court, how anyone could ever possibly have managed 
to score. The answer seems to be: they didn't, at least not that way. 
Normally the game had nothing to do with the hoop. The game was 
played between two opposing squads, attired as for battle, knocking 
the ball back and forth: 

The normal method of scoring was through the slow accumu- 
lation of points. But that process could be dramatically pre- 
empted. To send the ball through one of the rings — a feat, 
given the size of the ball and the ring, presumably rarer than 
a hole in one in golf — gave instant victory, ownership of all 
the goods wagered, and the right to pillage the cloaks of the 
onlookers. 108 

Whoever scored the point won everything, down to the audience's 

There were similar rules in board games, such as Cortes and Moct- 
ezuma were playing: if, by some freak stroke of luck, one of the dice 
landed on its edge, the game was over, and the winner took everything. 
This, Clenninden suggests, must have been what Moctezuma was re- 
ally waiting for. After all, he was clearly in the middle of extraordinary 
events. Strange creatures had appeared, apparently from nowhere, with 
unheard-of powers. Rumors of epidemics, of the destruction of nearby 
nations, had presumably already reached him. If ever there was a time 



that some grandiose revelation was due from the gods, then surely this 
was it. 

Such an attitude does seem to fit perfectly with the spirit of Az- 
tec culture gleaned from its literature, which exuded a sense of im- 
pending catastrophe, perhaps astrologically determined, just possibly 
avoidable — but probably not. Some have suggested that Aztecs must 
have somehow been aware that they were a civilization skating on 
the brink of ecological catastrophe; others, that the apocalyptic tone 
is retrospective — since, after all, what we know of Aztec literature is 
almost entirely gleaned from men and women who actually did expe- 
rience its complete destruction. Still, there does seem to be a certain 
frantic quality in certain Aztec practices — the sacrifice of as many as 
tens of thousands of war prisoners, most notably in the apparent belief 
that, were the Sun not continually fed with human hearts, it would die 
and world with it — that it's hard to explain in any other way. 

If Clenninden is right, for Moctezuma, he and Cortes were not 
simply gambling for gold. Gold was trivial. The stakes were the entire 

Moctezuma was above all a warrior, and all warriors are gam- 
blers; but unlike Cortes, he was clearly in every way a man of honor. 
As we've also seen, the quintessence of a warrior's honor, which is a 
greatness that can only come from the destruction and degradation of 
others, is his willingness to throw himself into a game where he risks 
that same destruction and degradation himself — and, unlike Cortes, to 
play graciously, and by the rules. 109 When the time came, it meant be- 
ing willing to stake everything. 

He did. And as it turns out, nothing happened. No die landed on 
its edge. Cortes continued to cheat, the gods sent no revelation, and the 
universe was eventually destroyed. 

If there's something to be learned here — and as I say, I think there 
is — it is that there may be a deeper, more profound relation between 
gambling and apocalypse. Capitalism is a system that enshrines the 
gambler as an essential part of its operation, in a way that no other 
ever has; yet at the same time, capitalism seems to be uniquely incapa- 
ble of conceiving of its own eternity. Could these two facts be linked? 

I should be more precise here. It's not entirely true that capitalism 
is incapable of conceiving of its own eternity. On the one hand, its 
exponents do often feel obliged to present it as eternal, because they 
insist that is it is the only possible viable economic system: one that, as 
they still sometimes like to say, "has existed for five thousand years and 
will exist for five thousand more." On the other hand, it does seem that 
the moment a significant portion of the population begins to actually 



believe this, and particularly, starts treating credit institutions as if 
they really will be around forever, everything goes haywire. Note here 
how it was the most sober, cautious, responsible capitalist regimes — 
the seventeenth-century Dutch Republic, the eighteenth-century British 
Commonwealth — the ones most careful about managing their public 
debt — that saw the most bizarre explosions of speculative frenzy, the 
tulip manias and South Sea bubbles. 

Much of this seems to turn on the nature of national deficits and 
credit money. The national debt is, as politicians have complained 
practically since these things first appeared, money borrowed from 
future generations. Still, the effects have always been strangely double- 
edged. On the one hand, deficit financing is a way of putting even more 
military power in the hands of princes, generals, and politicians; on the 
other, it suggests that government owes something to those it governs. 
Insofar as our money is ultimately an extension of the public debt, then 
whenever we buy a newspaper or a cup of coffee, or even place a bet 
on a horse, we are trading in promises, representations of something 
that the government will give us at some time in the future, even if we 
don't know exactly what it is. 110 

Immanuel Wallerstein likes to point out that the French Revolu- 
tion introduced several profoundly new ideas in politics — ideas which, 
fifty years before the revolution, the vast majority of educated Europe- 
ans would have written off as crazy, but which, fifty years afterward, 
just about anyone felt they had to at least pretend they thought were 
true. The first is that social change is inevitable and desirable: that the 
natural direction of history is for civilization to gradually improve. 
The second is that the appropriate agent to manage such change is 
the government. The third is that the government gains its legitimacy 
from an entity called "the people.'"" It's easy to see how the very idea 
of a national debt — a promise of continual future improvement (at the 
very least, five percent annual improvement) made by government to 
people — might itself have played a role in inspiring such a revolution- 
ary new perspective. Yet at the same time, when one looks at what men 
like Mirabeau, Voltaire, Diderot, Sieyes — the pbilosophes who first 
proposed that notion of what we now call "civilization" — were actu- 
ally arguing about in the years immediately leading up to the revolu- 
tion, it was even more about the danger of apocalyptic catastrophe, of 
the prospect of civilization as they knew it being destroyed by default 
and economic collapse. 

Part of the problem was the obvious one: the national debt is, 
first, born of war; second, it is not owed to all the people equally, but 
above all to capitalists — and in France at that time, "capitalist" meant, 



specifically, "those who held pieces of the national debt." The more 
democratically inclined felt that the entire situation was opprobrious. 
"The modern theory of the perpetuation of debt," Thomas Jefferson 
wrote, around this same time, "has drenched the earth with blood, 
and crushed its inhabitants under burdens ever accumulating."" 2 Most 
Enlightenment thinkers feared that it promised even worse. Intrinsic to 
the new, "modern" notion of impersonal debt, after all, was the possi- 
bility of bankruptcy.'" Bankruptcy, at that time, was indeed something 
of a personal apocalypse: it meant prison, the dissolution of one's 
estate; for the least fortunate, it meant torture, starvation, and death. 
What national bankruptcy would mean, at that point in history, no- 
body knew. There were simply no precedents. Yet as nations fought 
greater and bloodier wars, and their debts escalated geometrically, de- 
fault began to appear unavoidable." 4 Abbe Sieyes first put forward his 
great scheme for representative government, for instance, primarily as 
a way of reforming the national finances, to fend off the inevitable 
catastrophe. And when it happened, what would it look like? Would 
the money become worthless? Would military regimes seize power, 
regimes across Europe be likewise forced to default and fall like domi- 
nos, plunging the continent into endless barbarism, darkness, and war? 
Many were already anticipating the prospect of the Terror long before 
the revolution itself." 5 

It's a strange story because we are used to thinking of the Enlight- 
enment as the dawn of a unique phase of human optimism, borne on 
assumptions that the advance of science and human knowledge would 
inevitably make life wiser, safer, and better for everyone — a naive faith 
said to have peaked in the Fabian socialism of the 1890s, only to be 
annihilated in the trenches of World War I. In fact, even the Victorians 
were haunted by the dangers of degeneration and decline. Most of all, 
Victorians shared the near-universal assumption that capitalism itself 
would not be around forever. Insurrection seemed imminent. Many 
Victorian capitalists operated under the sincere belief that they might, 
at any moment, find themselves hanging from trees. In Chicago, for 
instance, a friend once took me on a drive down a beautiful old street, 
full of mansions from the 1870s: the reason, he explained, that it looked 
like that, was that most of Chicago's rich industrialists of the time were 
so convinced that the revolution was immanent that they collectively 
relocated along the road that led to the nearest military base. Almost 
none of the great theorists of capitalism, from anywhere on the politi- 
cal spectrum, from Marx to Weber, to Schumpeter, to von Mises, felt 
that capitalism was likely to be around for more than another genera- 
tion or two at the most. 



One could go further: the moment that the fear of imminent social 
revolution no longer seemed plausible, by the end of World War II, we 
were immediately presented with the specter of nuclear holocaust. 116 
Then, when that no longer seemed plausible, we discovered global 
warming. This is not to say that these threats were not, and are not, 
real. Yet it does seem strange that capitalism feels the constant need 
to imagine, or to actually manufacture, the means of its own immi- 
nent extinction. It's in dramatic contrast to the behavior of the leaders 
of socialist regimes, from Cuba to Albania, who, when they came to 
power, immediately began acting as if their system would be around 
forever — ironically enough, considering they in fact turned out to be 
something of an historical blip. 

Perhaps the reason is because what was true in 1710 is still true. 
Presented with the prospect of its own eternity, capitalism — or any- 
way, financial capitalism — simply explodes. Because if there's no end 
to it, there's absolutely no reason not to generate credit — that is, future 
money — infinitely. Recent events would certainly seem to confirm this. 
The period leading up to 2008 was one in which many began to believe 
that capitalism really was going to be around forever; at the very least, 
no one seemed any longer to be able to imagine an alternative. The im- 
mediate effect was a series of increasingly reckless bubbles that brought 
the whole apparatus crashing down. 

Chapter Twelve 

(1971-The Beginning of 
Something Yet to Be Determined) 

Look at all these bums: If only there 
were a way of finding out how much 
they owe. 

— Repo Man (1984) 

Free your mind of the idea of deserv- 
ing, of the idea of earning, and you will 
begin to be able to think. 
— Ursula K. Le Guin, The Dispossessed 

ON AUGUST 15, 1971, United States President Richard Nixon an- 
nounced that foreign-held U.S. dollars would no longer be convertible 
into gold — thus stripping away the last vestige of the international gold 
standard. 1 This was the end of a policy that had been effective since 
1931, and confirmed by the Bretton Woods accords at the end of World 
War II: that while United States citizens might no longer be allowed 
to cash in their dollars for gold, all U.S. currency held outside the 
country was to be redeemable at the rate of $35 an ounce. By doing so, 
Nixon initiated the regime of free-floating currencies that continues to 
this day. 

The consensus among historians is that Nixon had little choice. His 
hand was forced by the rising costs of the Vietnam War — one that, like 
all capitalist wars, had been financed by deficit spending. The United 
States was in possession of a large proportion of the world's gold re- 
serves in its vaults in Fort Knox (though increasingly less in the late 
1960s, as other governments, most famously Charles de Gaulle's France, 
began demanding gold for their dollars); most poorer countries, in con- 
trast, kept their reserves in dollars. The immediate effect of Nixon's 
unpegging the dollar was to cause the price of gold to skyrocket; it hit a 
peak of $600 an ounce in 1980. This of course had the effect of causing 



U.S. gold reserves to increase dramatically in value. The value of the dol- 
lar, as denominated in gold, plummeted. The result was a massive net 
transfer of wealth from poor countries, which lacked gold reserves, to 
rich ones, like the United States and Great Britain, that maintained them. 
In the United States, it also set off persistent inflation. 

Whatever Nixon's reasons, though, once the global system of cred- 
it money was entirely unpegged from gold, the world entered a new 
phase of financial history — one that nobody completely understands. 
While I was growing up in New York, I would hear occasional rumors 
of secret gold vaults underneath the Twin Towers in Manhattan. Sup- 
posedly, these vaults contained not just the U.S. gold reserves, but 
those of all the major economic powers. The gold was said to be kept 
in the form of bars, piled up in separate vaults, one for each country, 
and every year, when the balance of accounts was calculated, workmen 
with dollies would adjust the stocks accordingly, carting, say, a few 
million in gold out of the vault marked "Brazil" and transfering them 
to the one marked "Germany," and so on. 

Apparently a lot of people had heard these stories. At least, right 
after the Towers were destroyed on September n, 2001, one of the 
first questions many New Yorkers asked was: What happened to the 
money? Was it safe? Were the vaults destroyed? Presumably, the gold 
had melted. Was this the real aim of the attackers? Conspiracy theo- 
ries abounded. Some spoke of legions of emergency workers secretly 
summoned to make their way through miles of overheated tunnels, 
desperately carting off tons of bullion even as rescue workers labored 
overhead. One particularly colorful conspiracy theory suggested that 
the entire attack was really staged by speculators who, like Nixon, 
expected to see the value of the dollar crash and that of gold to 
skyrocket — either because the reserves had been destroyed, or because 
they themselves had laid prior plans to steal them. 2 

The truly remarkable thing about this story is that, after having be- 
lieved it for years, and then, in the wake of 9/11, having been convinced 
by some more knowing friends that it was all a great myth ("No," one 
of them said resignedly, as if to a child, "the United States keeps its 
gold reserves in Fort Knox"), I did a little research and discovered that, 
no, actually, it's true. The United States treasury's gold reserves are 
indeed kept at Fort Knox, but the Federal Reserve's gold reserves, and 
those of more than one hundred other central banks, governments, and 
organizations, are stored in vaults under the Federal Reserve building 
at 33 Liberty Street in Manhattan, two blocks away from the Tow- 
ers. At roughly five thousand metric tons (266 million troy ounces), 
these combined reserves represent, according to the Fed's own website, 

(1971-THE BEGINNING. . .) 363 

somewhere between one-fifth and one-quarter of all the gold that has 
ever been taken from the earth: 

"The gold stored at the Federal Reserve Bank of New York is se- 
cured in a most unusual vault. It rests on the bedrock of Manhattan 
Island — one of the few foundations considered adequate to support the 
weight of the vault, its door, and the gold inside — eighty feet below 
street level and fifty feet below sea level . . . To reach the vault, bullion- 
laden pallets must be loaded into one of the Bank's elevators and sent 
down five floors below street level to the vault floor ... If everything 
is in order, the gold is either moved to one or more of the vault's 122 
compartments assigned to depositing countries and official internation- 
al organizations or placed on shelves. 'Gold stackers,' using hydraulic 
lifts, do indeed shift them back and forth between compartments to 
balance credits and debts, though the vaults have only numbers, so 
even the workers don't know who is paying whom." 3 

There is no reason to believe, however, that these vaults were in 
any way affected by the events of September 11, 2001. 

Reality, then, has become so odd that it's hard to guess which ele- 
ments of grand mythic fantasies are really fantasy, and which are true. 
The image of collapsed vaults, the melted bullion, of secret workers 
scurrying deep below Manhattan with underground forklifts evacuat- 
ing the world economy — all this turns out not to be. But is it entirely 
surprising that people were willing to consider it? 4 

In America, the banking system since the days of Thomas Jefferson 
has shown a remarkable capacity to inspire paranoid fantasies: whether 
centering on Freemasons, or Elders of Zion, or the Secret Order of the 
Illuminati, or the Queen of England's drug-money-laundering opera- 
tions, or any of a thousand other secret conspiracies and cabals. It's 
the main reason why it took so long for an American central bank to 
be established to begin with. In a way there's nothing surprising here. 
The United States has always been dominated by a certain market 
populism, and the ability of banks to "create money out of nothing" — 
and even more, to prevent anyone else from doing so — has always been 
the bugaboo of market populists, since it directly contradicts the idea 
that markets are a simple expression of democratic equality. Still, since 
Nixon's floating of the dollar, it has become evident that it's only the 
wizard behind the screen who seems to be maintaining the viability 
of the whole arrangement. Under the free-market orthodoxy that fol- 
lowed, we have all being asked, effectively, to accept that "the market" 
is a self-regulating system, with the rising and falling of prices akin to 
a force of nature, and simultaneously to ignore the fact that, in the 
business pages, it is simply assumed that markets rise and fall mainly 



in anticipation of, or reaction to, decisions regarding interest rates by 
Alan Greenspan, or Ben Bernanke, or whoever is currently the chair- 
man of the Federal Reserve. 5 

One element, however, tends to go flagrantly missing in even the most 
vivid conspiracy theories about the banking system, let alone in official 
accounts: that is, the role of war and military power. There's a reason 
why the wizard has such a strange capacity to create money out of 
nothing. Behind him, there's a man with a gun. 

True, in one sense, he's been there from the start. I have already 
pointed out that modern money is based on government debt, and 
that governments borrow money in order to finance wars. This is just 
as true today as it was in the age of King Phillip II. The creation of 
central banks represented a permanent institutionalization of that mar- 
riage between the interests of warriors and financiers that had already 
begun to emerge in Renaissance Italy, and that eventually became the 
foundation of financial capitalism. 6 

Nixon floated the dollar in order to pay for the cost of a war in 
which, during the period of 1970-1972 alone, he ordered more than 
four million tons of explosives and incendiaries dropped on cities and 
villages across Indochina — causing one senator to dub him "the great- 
est bomber of all time." 7 The debt crisis was a direct result of the 
need to pay for the bombs, or to be more precise, the vast military 
infrastructure required to deliver them. This was what was causing 
such an enormous strain on the U.S. gold reserves. Many hold that 
by floating the dollar, Nixon converted the U.S. currency into pure 
"fiat money" — mere pieces of paper, intrinsically worthless, that were 
treated as money only because the United States government insisted 
that it should be. In that case, one could well argue that U.S. military 
power was now the only thing backing up the currency. In a certain 
sense this is true, but the notion of "fiat money" assumes that money 
really "was" gold in the first place. Really we are dealing with another 
variation of credit money. 

Contrary to popular belief, the U.S. government can't "just print 
money," because American money is not issued by the government at 
all, but by private banks, under the aegis of the Federal Reserve Sys- 
tem. The Federal Reserve — despite the name — is technically not part 
of the government at all, but a peculiar sort of public-private hybrid, 
a consortium of privately owned banks whose chairman is appoint- 
ed by the United States president, with Congressional approval, but 

(1971-THE BEGINNING. . .) 365 

which otherwise operates without public oversight. All dollar bills in 
circulation in America are "Federal Reserve Notes" — the Fed issues 
them as promissory notes, and commissions the U.S. mint to do the 
actual printing, paying it four cents for each bill. 8 The arrangement 
is just a variation of the scheme originally pioneered by the Bank of 
England, whereby the Fed "loans" money to the United States govern- 
ment by purchasing treasury bonds, and then monetizes the U.S. debt 
by lending the money thus owed by the government to other banks. 9 
The difference is that while the Bank of England originally loaned the 
king gold, the Fed simply whisks the money into existence by saying 
that it's there. Thus, it's the Fed that has the power to print money. 10 
The banks that receive loans from the Fed are no longer permitted to 
print money themselves, but they are allowed to create virtual money 
by making loans at a fractional reserve rate established by the Fed — 
though in the wake of the current credit crisis, at time of this writing, 
there has been a move to remove even these restrictions. 

All this is a bit of a simplification: monetary policy is endlessly 
arcane, and it does sometimes seem, intentionally so. (Henry Ford once 
remarked that if ordinary Americans ever found out how the banking 
system really worked, there would be a revolution tomorrow.) What 
is remarkable for present purposes is not so much that American dol- 
lars are created by banks, but that one apparently paradoxical result 
of Nixon's floating the currency was that these bank-created dollars 
themselves replaced gold as the world's reserve currency: that is, as the 
ultimate store of value in the world, yielding the United States enor- 
mous economic advantages. 

Meanwhile, the U.S. debt remains, as it has been since 1790, a war 
debt: the United States continues to spend more on its military than do 
all other nations on earth put together, and military expenditures are 
not only the basis of the government's industrial policy; they also take 
up such a huge proportion of the budget that by many estimations, 
were it not for them, the United States would not run a deficit at all. 

The U.S. military, unlike any other, maintains a doctrine of global 
power projection: that it should have the ability, through roughly 800 
overseas military bases, to intervene with deadly force absolutely any- 
where on the planet. In a way, though, land forces are secondary; at 
least since World War II, the key to U.S. military doctrine has always 
been a reliance on air power. The United States has fought no war in 
which it did not control the skies, and it has relied on aerial bombard- 
ment far more systematically than any other military — in its recent oc- 
cupation of Iraq, for instance, even going so far as to bomb residential 
neighborhoods of cities ostensibly under its own control. The essence 



of U.S. military predominance in the world is, ultimately, the fact that 
it can, at will, drop bombs, with only a few hours' notice, at absolutely 
any point on the surface of the planet. 11 No other government has ever 
had anything remotely like this sort of capability. In fact, a case could 
well be made that it is this very power that holds the entire world 
monetary system, organized around the dollar, together. 

Because of United States trade deficits, huge numbers of dollars 
circulate outside the country; and one effect of Nixon's floating of the 
dollar was that foreign central banks have little they can do with these 
dollars except to use them to buy U.S. treasury bonds. 12 This is what 
is meant by the dollar becoming the world's "reserve currency." These 
bonds are, like all bonds, supposed to be loans that will eventually 
mature and be repaid, but as economist Michael Hudson, who first 
began observing the phenomenon in the early '70s, noted, they never 
really do: 

To the extent that these Treasury IOUs are being built into 
the world's monetary base they will not have to be repaid, but 
are to be rolled over indefinitely. This feature is the essence of 
America's free financial ride, a tax imposed at the entire globe's 
expense. 13 

What's more, over time, the combined effect of low interest pay- 
ments and the inflation is that these bonds actually depreciate in 

(1971-THE BEGINNING . . .) 


value — adding to the tax effect, or as I preferred to put it in the first 
chapter, "tribute." Economists prefer to call it "seigniorage." The effect, 
though, is that American imperial power is based on a debt that will 
never — can never — be repaid. Its national debt has become a promise, 
not just to its own people, but to the nations of the entire world, that 
everyone knows will not be kept. 

At the same time, U.S. policy was to insist that those countries 
relying on U.S. treasury bonds as their reserve currency behaved in ex- 
actly the opposite way as they did: observing tight money policies and 
scrupulously repaying their debts. 

As I've already observed, since Nixon's time, the most significant 
overseas buyers of U.S. treasury bonds have tended to be banks in 
countries that were effectively under U.S. military occupation. In Eu- 
rope, Nixon's most enthusiastic ally in this respect was West Germany, 
which then hosted more than three hundred thousand U.S. troops. In 
more recent decades the focus has shifted to Asia, particularly the cen- 
tral banks of countries like Japan, Taiwan, and South Korea — again, 
all U.S. military protectorates. What's more, the global status of the 
dollar is maintained in large part by the fact that it is, again since 1971, 
the only currency used to buy and sell petroleum, with any attempt by 
OPEC countries to begin trading in any currency stubbornly resisted 
by OPEC members Saudi Arabia and Kuwait — also U.S. military pro- 
tectorates. When Saddam Hussein made the bold move of singlehand- 
edly switching from the dollar to the euro in 2000, followed by Iran 
in 2001, this was quickly followed by American bombing and military 
occupation. 14 How much Hussein's decision to buck the dollar really 
weighed into the U.S. decision to depose him is impossible to know, 
but no country in a position to make a similar switch can ignore the 
possibility. The result, among policymakers particularly in the global 
South, is widespread terror. 15 

In all this, the advent of the free-floating dollar marks not a break 
with the alliance of warriors and financiers on which capitalism itself 
was originally founded, but its ultimate apotheosis. Neither has the 
return to virtual money led to a great return to relations of honor 
and trust: quite the contrary. By 1971, the change had only just begun. 
The American Express card, the first general-purpose credit card, had 
been invented a mere thirteen years before, and the modern national 
credit-card system had only really come into being with the advent of 
Visa and MasterCard in 1968. Debit cards were later, creatures of the 



1970s, and the current, largely cashless economy only came into being 
in the 1990s. All of these new credit arrangements were mediated not 
by interpersonal relations of trust but by profit-seeking corporations, 
and one of the earliest and greatest political victories of the U.S. credit- 
card industry was the elimination of all legal restrictions on what they 
could charge as interest. 

If history holds true, an age of virtual money should mean a 
movement away from war, empire-building, slavery, and debt peon- 
age (waged or otherwise), and toward the creation of some sort of 
overarching institutions, global in scale, to protect debtors. What we 
have seen so far is the opposite. The new global currency is rooted in 
military power even more firmly than the old was. Debt peonage con- 
tinues to be the main principle of recruiting labor globally: either in the 
literal sense, in much of East Asia or Latin America, or in the subjective 
sense, whereby most of those working for wages or even salaries feel 
that they are doing so primarily to pay off interest-bearing loans. The 
new transportation and communications technologies have just made 
it easier, making it possible to charge domestics or factory workers 
thousands of dollars in transportation fees, and then have them work 
off the debt in distant countries where they lack legal protections. 16 
Insofar as overarching grand cosmic institutions have been created that 
might be considered in any way parallel to the divine kings of the an- 
cient Middle East or the religious authorities of the Middle Ages, they 
have not been created to protect debtors, but to enforce the rights of 
creditors. The International Monetary Fund is only the most dramatic 
case in point here. It stands at the pinnacle of a great, emerging global 
bureaucracy — the first genuinely global administrative system in human 
history, enshrined not only in the United Nations, the World Bank, and 
the World Trade Organization, but also the endless host of economic 
unions and trade organizations and non-governmental organiz